Voda Idea cuts loss by 39.5% to Rs 7,022 cr on lower exceptional expenses

Posts highest-ever EBITDA margin, on the back of lower operating and exceptional expenses; lags peer on ARPU

Vodafone Idea (Vi) cut down its net loss by 39.5 per cent YoY in the fourth quarter FY21 to Rs 7,022 crore on the back of lower operating and exceptional expenses. In the same quarter of the previous year, it had posted a net loss of Rs 11,643 crore.

The figure, however, widened 55 per cent on a sequential basis as the company had reported a loss of Rs 4,532 crore in Q3FY21.

The company managed to trim subscriber loss to two million in the fourth quarter on a sequential basis but it lagged peers on other parameters, such as average revenue per user (ARPU). Vi is yet to close its fundraising; the firm said it is in active discussions with potential investors.

Revenue from operations declined 18.2 per cent on a YoY basis to Rs 9,607 crore against Rs 11,754 crore a year ago, owing to the discontinuation of interconnect usage charges. Sequentially, too, revenues were down 11.8% from Rs 10,894 crore in the December 2020 quarter.

Telecom companies used to pay an IUC of six paise per minute for calls made from their network to other service providers and this was discontinued from January 1 on orders of the telecom sector regulator. This led to a drop in revenue and ARPU for the company, on both sequential and YoY bases. ARPU declined 11.5 per cent sequentially to Rs 107.

The telecom company’s fourth-quarter result was positively impacted due to lower operating as well as exceptional expenses.

Opex or operating expenditure fell sharply by 29.5 per cent YoY and 21.3 per cent sequentially to Rs 5,199 crore. 

As a result, Vodafone Idea reported an Ebitda margin of 45.9 per cent, which is the highest ever posted by the company.

"After successfully achieving targeted merger opex synergies of Rs 8,400 crore, we have undertaken the cost optimisation exercise across the company in line with the evolving industry structure and business model. We target to achieve Rs 4,000 crore of annualised cost savings by end of this calendar year. Through several initiatives, we have already achieved Rs 65 per cent of the targeted annualised savings on a run-rate basis by the end of Q4FY21," the company said in a release.

The company had incurred exceptional expenses of Rs 6140 crore in Q4FY20 and that reduced to Rs 974 crore in the fourth quarter of FY21. The December 2020 quarter had seen exceptional income of Rs 1,697 crore, aided by gains from sale of stake in Indus Towers.

Ravinder Takkar, MD & CEO, Vodafone Idea, said: “FY21 has been a transformational year for Vodafone Idea with several important milestones achieved, including the launch of our unified brand ‘Vi’. In the year of the pandemic, when people and businesses were hugely dependent on telecom connectivity, we delivered superior network experience and improvement in several operating metrics supported by Vi GIGAnet, which remains the fastest 4G network in India, as per Ookla, as well as the network with highest-rated voice quality as per Trai. We enter FY22 with a renewed focus on executing our strategy to keep our customers ahead, and our cost optimisation plan remains on track to deliver the targeted savings. We are in active discussion with potential investors for fundraising, to achieve our strategic intent.”

Meanwhile, the company's net debt stood at Rs 1.8 trillion as on March 2021 higher than Rs 1.17 trillion in the previous quarter, while its networth stood at a negative Rs 38,228 crore, as against negative Rs 31,243 crore in the December 2020 quarter. The sharp increase in debt is because Vodafone had recognised AGR dues of some Rs 60,000 crore as debt. The same wasn't treated as debt in Q3.