Vodafone Idea Reports Ninth Quarterly Loss as Users Dump Carrier

(Bloomberg) -- Vodafone Idea Ltd. reported a ninth straight quarterly loss as subscribers switched to rivals including billionaire Mukesh Ambani’s wireless unit amid intensifying competition.

Net loss narrowed to 72.2 billion rupees ($974 million) in the three months through September, the company said in a statement Thursday, a decline of 86% compared to the same period a year ago. An average of analyst estimates had forecast a loss of 51.9 billion rupees.

Revenue fell 0.5% to 107.9 billion rupees and missed estimates. Earnings were announced after trading hours.

Key Insights

• Vodafone Idea said it was evaluating various fund raising options after announcing in September plans to raise as much as 250 billion rupees selling debt and shares. It said its ability to continue as a business relied on successful negotiations with lenders and sufficient cash flow to settle or refinance liabilities coming due.
• The telecom carrier, formed by the merger of Vodafone Group Plc’s local unit with billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., was crushed by a India court order last year to pay billions of dollars in back fees to the government.
• Having reported no annual profit since 2017, Birla warned in December that the venture was headed for insolvency in the absence of relief on the dues. India’s Supreme Court last month allowed operators to stagger the back-dues payout over 10 years, in a reprieve to the firm with almost $16 billion of net debt.
• Despite an increase in tariffs in December last year, the carrier’s recovery is hindered by aggressive rivals -- Ambani’s Reliance Jio Infocomm Ltd. and billionaire Sunil Mittal’s Bharti Airtel Ltd. -- which have been luring subscribers away with attractive plans.
• Among the big three Indian wireless carriers, Vodafone Idea has been the weakest financially. Jio’s debut in 2016 with free calls and cheap data triggered a sweeping consolidation that reduced the number of non-state carriers to three from 12 a few years ago.

Market Reaction

• Vodafone Idea shares have rallied 36% this year on optimism its Indian and British partners will set it back on a path to recovery. The fundraising and staggered payment option given by the court have also boosted its revival prospects.

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• Total subscribers fell to 271.8 million from 279.8 million in the preceding quarter.
• Mobile average revenue per user came in at 119 rupees.
• Net debt for the quarter-ended September stood at 1.15 trillion rupees.
• Rival Bharti Airtel reported an unexpected loss for the September quarter but investors cheered the massive surge in new users that boosted Bharti’s revenue and margins.

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