Vodafone Idea's Q4 Losses Surge to Rs 7,675 Crore with Rising Costs

Telecom giant Vodafone Idea (VIL) has reported a significant increase in its losses for the March quarter, amounting to Rs 7,675 crore, up from Rs 6,419 crore in the same period last year. This financial downturn is attributed to a rise in interest and financing costs, alongside a decrease in its overall subscriber base. Despite these challenges, the company's consolidated revenue of operations remained stable at Rs 10,607 crore during the reported quarter.

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The firm noted an improvement in Average Revenue Per User (ARPU), although it faced a reduction in its subscriber numbers both sequentially and on a year-over-year basis. Specifically, the interest and finance cost surged by approximately 27 per cent to Rs 6,247.8 crore from Rs 4,907.8 crore in the corresponding quarter a year ago.

For the fiscal year ending March 31, 2024, VIL's losses widened to Rs 31,238.4 crore from Rs 29,301.1 crore in the previous year. However, annual revenue from operations saw a slight increase of 1.1 per cent to Rs 42,651.7 crore from Rs 42,177.2 crore in 2022-23.

VIL CEO Akshaya Moondra highlighted the company's strategic efforts to recover from its financial strain. "We registered growth in ARPU and 4G subscribers for 11 successive quarters," Moondra stated. He further elaborated on the company's equity fundraise of approximately Rs 215 billion (Rs 21,500 crore), which aims to rejuvenate investment cycles for expanding 4G coverage and launching 5G services.

The company has already raised Rs 20,075 crore as part of its approved board plan to accumulate Rs 45,000 crore. This sum includes Rs 18,000 crore through a follow-on-public offer (FPO) and Rs 2,075 crore through preferential equity allotment to an Aditya Birla Group firm. Notably, Aditya Birla Group holds a 17.5 per cent stake in VIL, with Vodafone Group owning 31.4 per cent and the government possessing a 32.2 per cent share.

Moondra also mentioned ongoing discussions with lenders to secure debt funding for network expansion plans. The anticipated capital expenditure (capex) is expected to be between Rs 500 to 550 billion over the next three years, focusing on expanding 4G coverage in priority circles and launching 5G services in key cities.

Debt Reduction and Network Expansion

VIL's total debt stands at approximately Rs 2,07,630 crore as of March 31, 2024. The company has managed to reduce its debt from banks and financial institutions by Rs 7,090 crore over the past year. Its obligations to the government include deferred spectrum payment obligations of Rs 1,33,110 crore and AGR liability of Rs 70,320 crore.

The telecom operator's customer base saw a decline of 5.7 per cent to 21.3 crore from 22.6 crore in the March quarter of the previous year. Despite this decrease, there was an increase in post-paid customers by about 1.3 per cent on a year-over-year basis.

VIL's focus on enhancing its network has led to an increase in its 4G subscriber base to 12.63 crore from 12.26 crore on a year-over-year basis. The company has also completed minimum rollout obligations for launching its anticipated 5G services in select circles.

In conclusion, Vodafone Idea's financial report underscores the challenges faced by the telecom sector but also highlights strategic initiatives aimed at recovery and growth amidst competitive pressures.