Voda-Idea loss widens as tariff war continues
Telecom firm posts narrower-than-expected loss of ₹5,004.6 cr
NEW DELHI: Vodafone Idea Ltd’s consolidated net loss widened marginally in the fiscal third quarter, underscoring a brutal tariff war with Reliance Jio Infocomm Ltd.
India’s largest telecom operator by subscribers as well as revenue also posted a 2.2% sequential drop in revenue in the three months through December.
Vodafone Idea incurred a net loss of ₹5,004.6 crore last quarter, compared with ₹4,973.8 crore in the preceding quarter. The figure was, however, narrower than analysts’ forecast of a loss of ₹5,256 crore by Refinitiv Eikon data, according to a Reuters report.
The December quarter results are the first full-quarter results for Vodafone Idea, post completion of a merger of Vodafone India and Idea Cellular on August 31.
The wider net loss came despite the company witnessing higher data consumption on its network and signing up more 4G subscribers.
Vodafone Idea posted a consolidated revenue of ₹11,764.8 crore in the December quarter, the telecom operator said in a statement on Wednesday. It beat the other two operators on this metric, as revenue from Bharti Airtel Ltd’s India mobile business was ₹10,053 crore, while Reliance Jio generated ₹10,383 crore in operating revenue last quarter.
The company said pricing plans on both brands Vodafone and Idea have been harmonized and integration of the distribution channels, retail footprint and customer service operations is expected to be completed shortly.
The results illustrate the con- tinuing struggle of Vodafone Idea and other telecom operators in India to grow revenues after the entry of Reliance Jio in September 2016.
The heated tariff war, which started with Jio’s cheap data tariffs forcing operators to match offerings, also led to consolidation among operators, some of which have since shut shop, leaving just two other private operators, Bharti Airtel and Vodafone Idea, in the telecom battleground.
Vodafone Idea’s earnings before interest, taxes, depreciation and amortization (Ebitda) from wireless operations in India grew 16% quarter-on-quarter to ₹1,136.8 crore, but are still the lowest among all operators. Jio posted Ebitda of ₹4,053 crore, while Airtel recorded ₹1,949.8 crore last quarter.
Average revenue per user (Arpu) for Vodafone Idea was the lowest among the three operators at ₹89, compared to Bharti Airtel’s ₹104 and Jio’s ₹130 in the December quarter. However, Vodafone Idea’s Arpu rose by a rupee from ₹88 in the September quarter.
The improvement in Arpu can be attributed to Vodafone Idea’s customer base falling by 35.1 million in the December quarter to 387.2 million. This trend was also witnessed by Airtel, which saw its customer base for the India mobile business falling 14.6% to 284.2 million in the December quarter.
Both operators started minimum recharge plans starting at ₹35 to reduce inactive and incoming-only customer base.
The average monthly data usage per data subscriber improved to 6.2GB in the December quarter from 5.6GB in the preceding quarter.
The biggest silver lining for Vodafone Idea is the addition of 9.5 million 4G subscribers last quarter, supported by better coverage, which takes the total 4G user base to 75.3 million. It however, trails Airtel and Jio on this metric. Vodafone Idea’s 4G population coverage has improved to over 64% as of December-end, compared to less than 50% for each brand in August 2018.
“We remain focused on fortifying our position in key districts by expanding the coverage and capacity of our 4G network, and target a higher share of new 4G customers, while offering an enhanced network experience to our customers. The proceeds from the announced capital raise will put us in a strong position to achieve our strategic goals,” Balesh Sharma, chief executive of Vodafone Idea, said.
Vodafone Idea last month said its board had approved a rights issue of ₹25,000 crore to existing eligible equity shareholders in line with the recommendations of a capital-raising committee formed in November.