Vodafone Idea Reports Record Rs 50,922 Crore Loss In Q2 As Provisions Soar: 10 Things To Know

Vodafone Idea said its revenue from operations came in at Rs 10,844 crore in the second quarter of current financial year.

Vodafone Idea Reports Record Rs 50,922 Crore Loss In Q2 As Provisions Soar: 10 Things To Know

Vodafone Idea's gross debt stood at Rs 1.17 lakh crore at the end of September

Vodafone Idea on Thursday reported a net loss of Rs. 50,921.9 crore for the quarter ended September 30 - marking the biggest quarterly loss in India's corporate history. Provisions for outstanding government dues and penalty due to a one-time charge of Rs. 25,677.9 crore levied by the Department of Telecommunications affected the company's financial performance in the quarter. In a regulatory filing, Vodafone Idea said its revenue from operations came in at Rs. 10,844 crore in the second quarter of current financial year, as against Rs. 7,663.5 crore in the corresponding period a year ago.

Here are 10 things to know about this big story:

  1. Vodafone Idea's net loss stood way above Street estimates, due to the payment of dues to the telecom department. Analysts had on an average expected the company to report a consolidated net loss of Rs. 4,422 crore for the quarter, news agency Reuters reported citing Refinitiv data, although those figures did not include the one-time charge.

  2. The telecom major had registered a net loss of Rs. 4,973.8 crore for the quarter ended September 30, 2018. The numbers were not comparable as the merger of Vodafone India with Idea Cellular was completed on August 31, 2018, and therefore the financials for the second quarter of 2018-19 included the figures of Vodafone India.

  3. Vodafone Idea's average revenue per user (ARPU) - a key metric of profitability for telecom companies - came in at Rs. 107 in the July-September period as against Rs. 108 in the previous quarter. Its subscriber base dropped to 31.11 crore at the end of September, from 32 crore at the end of June.

  4. The Supreme Court last month upheld a demand by the Department of Telecommunications (DoT) that wireless carriers pay Rs. 92,000 crore in overdue levies and interest. Vodafone Idea and rival Bharti Airtel - two of the country's three main mobile carriers - will have to pay a bulk of this demand.

  5. The top court's order on Adjusted Gross Revenue (AGR) matter "has significant financial implications for the industry", Vodafone Idea said.

  6. "We are in active discussions with the government seeking financial relief following the recent Hon'ble Supreme Court ruling," said Ravinder Takkar, managing director and CEO, Vodafone Idea. The telecom service provider also said it was in the process of filing a review petition with the Supreme Court, and its ability to continue as going concern is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy.

  7. The company's gross debt at the end of September stood at Rs. 1.17 lakh crore. Analysts have previously warned that Vodafone Idea will be the worst hit after the Supreme Court ruling due to its already stretched balance sheet, according to Reuters.

  8. Telecom providers in India pay the Department of Telecommunications (DoT) nearly 3-5 per cent of their adjusted gross revenue (AGR) in usage charges for spectrum or airwaves and 8 per cent of AGR as licence fees.

  9. The DoT and the mobile carriers have been at odds over the definition of AGR. The companies argue that AGR should comprise just revenue accrued from core services, while the DoT says AGR should include all revenues.

  10. Meanwhile, Bharti Airtel earlier on Thursday reported a consolidated net loss of Rs. 23,045 crore for the September quarter. Airtel said it made a provision of Rs. 28,450 crore after the Supreme Court ruling.



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