Vodafone Idea slips 7% as June quarter losses widen to Rs 25,460 crore

Shares of Vodafone Idea dipped as much as 7.4 per cent to Rs 7.64 on the BSE on Friday after the telecom operator reported a sharp rise in its losses to Rs 25,460 crore for the June quarter of FY 2020-21 due to high provisioning for statutory dues. In comparison, Vodafone Idea's loss stood at about Rs 4,874 crore in the year-ago period.

The revenue from operations came in at Rs 10,659.3 crore for the first quarter of FY21, against Rs 11,269.9 crore in the same period of the previous year, according to a regulatory filing.

The company said it has recognised additional charge of Rs 19,440.5 crore in June quarter towards adjusted gross revenue (AGR) liabilities.

"...during this quarter, on prudence, we have recognised a charge of Rs 194.4 billion as an exceptional item towards the total estimated AGR liability, in addition to estimated recognised liability of Rs 460.0 billion as on March 31, 2020," a company statement said.

The company said gross subscriber additions were severely impacted by the closure of retail stores during the nationwide lockdown due to Covid-19, resulting in the subscriber base declining to 27.98 crore in Q1FY21 from 29.11 crore in Q4 FY20.

Average revenue per user (ARPU), at Rs 114, increased on a YoY basis, but declined sequentially despite the tariff hike in December.

However, there were some positives, like the strong data volume growth of 10.6 per cent, the highest in the last six quarters. Data usage per broadband subscriber, too, increased to 13 GB per month, supported by expansion in network capacity, the company said.

Ravinder Takkar, the MD and CEO of Vodafone Idea, said, "Q1FY21 was a challenging quarter as availability of recharges due to store closure and ability of customers to recharge on account of economic slowdown were impacted."

At 9:31 AM, the stock had pared some of its losses and was trading with 3.03 per cent cut at Rs 8 as compared to 0.47 per cent decline in the benchmark S&P BSE Sensex. A combined 15.5 crore shares have already changed hands on the counter in NSE and BSE.

CLSA has maintained 'Underperform' on the stock and reduced its target price to Rs 8.40 from earlier Rs 9.20.

"We cut our FY21-22 forecasts for Vodafone Idea by 1-5 per cent. Factor in additional cost savings of Rs 4,000 crore. EMI to be 30 per cent of cash Ebitda even if 20-year is given for AGR payment," it said.