Vodafone Idea Posts a Loss Again as Jio Continues to Rampage
(Bloomberg) -- Vodafone Idea Ltd. posted a loss for the second straight quarter, signaling that a brutal price war continued to ravage India’s largest mobile-phone carrier.
The company, formed by the merger of Vodafone Group Plc’s Indian unit and Idea Cellular Ltd., reported a net loss of 50 billion rupees ($700 million) for the quarter ended Dec. 31, according to an exchange filing Wednesday. It narrowly beat the average analyst estimate for a 51.7 billion-rupee loss, according to data compiled by Bloomberg. It had posted nearly the same net loss on its debut last quarter.
The steep losses indicate the continued pain inflicted on telecom operators in the world’s second-largest wireless market after the entry of Asia’s richest man, Mukesh Ambani. His Reliance Jio Infocomm Ltd. started in 2016 with free services that drove rivals to quit or merge in order to survive.
Vodafone Idea, which has billionaire Kumar Mangalam Birla as the chairman of its board, had revenues of 117.6 billion rupees and an average revenue per user of 89 rupees, according to the filing. Its subscriber base fell to 387.2 million from 422.3 million in the preceding quarter.
The carrier is also planning to raise as much as 250 billion rupees via a rights offering to build a war chest and fend off Reliance Jio, which offers packages with enough data to watch 46 hours of YouTube videos for about $2 a month. The board approved the fund raising on Wednesday.
“We are moving faster than expected on integration, specifically on the network front,” Balesh Sharma, chief executive officer at Vodafone Idea said in a statement. “The proceeds from the announced capital raise will put us in a strong position.”
Its shares closed 1.5 percent lower at 30 rupees in Mumbai, taking its decline this year to nearly 21 percent. The earnings were announced after market hours.
Vodafone and Birla’s Idea Cellular decided to merge in March 2017 and closed the deal last August. While the combination overtook Bharti Airtel Ltd. to become the country’s no.1 carrier by subscribers, it’s top-ranked status hasn’t translated into strong financials.
Bharti Airtel managed to eke out a surprise profit for the past quarter driven by one-time gains when it reported earnings earlier this month while Reliance Jio turned in a net income of 8.31 billion rupees with a total subscriber base of 280.1 million.
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