Q4FY19 Result: Vodafone Idea posts net loss of Rs 4,881.9 crore but revenue improves

In its fourth quarter result for FY19, Vodafone Idea finally made a gradual improvement in its revenue, while narrowing its losses on a quarterly basis. Among many strategic initiatives during post merger was also stabilizing Average Revenue Per User (ARPU), which Vodafone Idea has indicated finally showing progress. In Q4FY19, Vodafone Idea consolidated net loss narrows to Rs 4,881.9 crore compared to loss of Rs 5,004.6 crore in the preceding quarter. However, the Q4FY19 loss is still more than doubled as against loss of just Rs 962.2 crore in the corresponding period of the previous year. Consolidated revenue saw gradual improvement in Q4FY19 to Rs 11,775 crore versus Rs 11,764.8 crore in Q3FY19, but was way higher as against revenue of Rs 6,387.7 crore in Q4FY18. The sequential stabilisation in revenues during Q4, can be attributed to the introduction of service validity vouchers. 

Going forward, synergy realization was also on track with 60% of target achieved up to date. Normalised operating expenses excluding license fee, spectrum usage charges and roaming & access charges were at Rs 12.8 billion lower than Vodafone Idea’s proforma operating expenses in Q1 which was the last quarter prior to completion of the merger. 

Talking about Q4FY19 result, Balesh Sharma, CEO of Vodafone Idea Limited said, “We are pleased with the rapid progress we have made to deliver on our stated strategy. The initiatives we have taken since the merger are yielding positive results and we are well on track to deliver our synergy targets two years early. We remain focused on fortifying our position in key profitable districts by expanding coverage and capacity of our 4G network, targeting higher share of new 4G customers by offering an enhanced network experience, whilst also improving cash flows through cost transformation. The oversubscription of our recent rights issue, the largest in India, is a clear testament to investors support for our strategy.”

Meanwhile, operating profit increased by 57% on quarterly basis to Rs 17.9 billion. The EBITDA normalised for one-offs stands at Rs 15.9 billion. 

Average daily revenue (ADR) in Q4FY19, grew by 2.3% on quarterly basis after witnessing successive declines for the 11 prior quarters. 

Following the merger on August 31, 2018, Vodafone Idea in their Q4 FY19 financial audit report said, “we have accelerated the integration of the two businesses and are on track to deliver Rs 84 billion of targeted run-rate costs synergies by FY21, two years ahead of initial target set at the time of merger announcement in March 2017.”

During the quarter, Vodafone Idea enhanced capabilities of some of their 900 MHz sites to provide 4G service through dynamic spectrum refarming in the service areas of Kerala and Delhi. As a result of their focus on accelerating network integration, the company removed surplus equipment on 24,000 sites out of the total 67,000 sites. Subsequently, they have also exited 9,900 low utilization sites. Both initiatives have yielded significant cost savings for the company. 

As on March 2019, Vodafone Idea’s gross debt stood at Rs 1,259.4 billion which included deferred spectrum payment obligations due to the government of Rs 906.8 billion. Meanwhile, cash and cash equivalents were at Rs 75.5 billion resulting in net debt of Rs 1,183.9 billion versus Rs 1,148.8 billion in Q3FY19. 

 Also, in Q4FY19, Vodafone Idea successfully closed their largest rights issue raising Rs 250 billion of equity. The strong participation from public shareholders resulted in 1.2 times subscription for the public component of the issue demonstrating investors strong support for their strategy.

The share price of Vodafone Idea on Sensex, finished at Rs 14.45 per piece up by 3.21%. The company also touched an intraday low and high of Rs 13.90 per piece and Rs 15 per piece respectively.