Vodafone Idea hits record low after dismal Q1 show

Vodafone Idea crashed 26.7% to Rs 6.78 at 12:09 IST on the BSE after the company reported a consolidated net loss of Rs 4067.01 crore compared with a net loss of Rs 2757.60 crore in Q1 June 2019 over Q1 June 2018.

The result was announced after market hours on Friday, 26 July 2019.

Meanwhile, the S&P BSE Sensex was down by 340.15 points or 0.9% to 37,542.64.

On the BSE, 295.05 lakh shares were traded in the counter so far compared with average daily volumes of 303.78 lakh shares in the past two weeks. The stock had hit a high of Rs 9 so far during the day. The stock had low a high of Rs 6.6 so far during the day, which is also a record low for the counter. It hit a 52-week high of Rs 36.78 on 27 July 2018.

The company's consolidated net sales increased 92% to Rs 11264.70 crore in Q1 June 2019 over Q1 June 2018.

Headline tariffs have remained stable during the quarter. However the customer base on 'service validity vouchers' is yet to stabilize on a regular recharge cycle. As a result, revenue in the current quarter was impacted by the churn of customers who had recharged on service validity plans in Q4. This, coupled with the impact of continued down trading of high Average Revenue per User (ARPU) customers, led to 4.3% decline in revenue to Rs 11270 crore in Q1 June 2019 over Rs 11780 crore in Q4 March 2018.

The company's earnings before interest tax depreciation and amortization (EBITDA) increased 453.44% to Rs 3650 crore in Q1 June 2019 over Q1 June 2018. The company clarified that adoption of Ind AS 116 positively benefited EBITDA numbers.

The EBITDA margin grew to 32.4% in Q1 June 2019 from 11.2% Q1 June 2018.

On an underlying basis the impact of lower revenues was partially offset by further cost synergy realisation, with Q1 June 2019 underlying operating expenses (excluding licence fees & spectrum usage charges and roaming & access charges) lower by Rs 1480 crore compared to Q1 June 2018, after adjusting for inflation driven cost increases and incremental network rollout. On an annualized basis, this represents 70% of the company's target full opex synergy of Rs 8400 crore. The firm is therefore well on track to realize its full opex synergy targets by Q1 June 2021.

Capex spend for Q1 June 2019 was Rs 2840 crore. Gross debt as on 30 June 2019 was Rs 1,20,440 crore, including deferred spectrum payment obligations due to the Government of Rs 89180 crore but excluding lease liabilities. Cash & cash equivalents were Rs 21,180 crore resulting in net debt of Rs 99,260 crore.

The company's subscriber base declined to 320 million from 334.1 million in Q4 March 2019 primarily due to customer churn following the introduction of 'service validity vouchers' in the prior quarters. However, the company's high ARPU subscriber base remained broadly stable. The company has taken certain market initiatives to offer a better value proposition to low ARPU customers and to reduce low-end churn. The company has also introduced bigger data bundles at Rs. 229/255 offering Unlimited Voice and 2/2.5 GB data per day, to upgrade heavy data users from Rs 169/199 plans, which should improve ARPU over time.

Commenting on company's Q1 performance, Balesh Sharma, CEO Vodafone Idea limited, said "We are delivering on our stated strategy although the benefits are not yet visible in our top line. As we continue to integrate our networks, our customers' data experience is significantly improving in most areas and we now lead the league tables on data download speeds in Delhi, West Bengal and Chennai. We remain focused on expanding our 4G coverage to over a billion Indians. We are well on track to deliver our synergy targets by Q1 FY21."

Vodafone Idea is an Aditya Birla Group and Vodafone Group partnership. It is India's leading telecom service provider.

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