Voda Idea logs second quarter of Rs5,000-cr loss courtesy Jio
07 February 2019
Voda Idea, the combined entity of the once second and third-largest telecom service providers in India, Vodafone India and Ideal Cellular Ltd, reported a second quarterly loss of Rs5,000 crore hammered by unending competition from Reliance Jio Infocomm Ltd, the telecom outfit of Mukesh Ambani’s Reliance Industries.
Vodafone Idea, the country’s largest telecom company, said it has been working out business synergies and cost optimisation ever since the August 2018 merger.
Revenues for the October-December 2018-19 quarter stood at Rs11,765 crore, down 2 per cent on a sequential basis (comparable numbers for the previous year are not available as Vodafone Idea and Idea Cellular operated as different entities then).
Vodafone-Idea said despite tough market situation, it is moving comfortably on its business plans post the merger. The joint entity plans to raise Rs25,000 crore to fund expansion and tackle competition. The fund-raising process is in progress, the company said.
“We are progressing well on our stated strategy. The initiatives taken during the quarter started showing encouraging trends by the end of the quarter,” Balesh Sharma, CEO of Vodafone Idea, said.
He said that the company is moving “faster than expected” on integration, specifically on the network front, and is on track to deliver synergy targets. “We remain focused on fortifying our position in key districts by expanding the coverage and capacity of our 4G network, and target a higher share of new 4G customers… The proceeds from the announced capital raise will put us in a strong position to achieve our strategic goals,” Sharma added.
The company said that its subscriber base has come down by around 35 million users in the quarter as it shed customers who were not paying minimum recharge. “The introduction of ‘service validity vouchers’ on a national basis during the quarter, which require customers to make a minimum recharge of Rs35 (28 days validity), contributed to a reduction of 35 million customers in the quarter, as expected. Incoming-only’ customers or ‘minimal ARPU’ customers consolidated their spending from multiple to single SIMs.”
The measure helped the company increase its average revenue per user (ARPU) by 1.5 per cent in the quarter. “We expect to see further positive impact on revenue and ARPU from these actions.”
Vodafone-Idea expects tariff rates to remain “stable” during the quarter. “However, customers continue to migrate to lower ARPU plans. Within this context, the company has implemented various initiatives to improve its revenue, profitability and competitive standing in line with its stated strategy, which began to impact performance positively towards the end of the quarter,” it added.