Vodafone Idea said it undertook a cost optimisation exercise across the company and plans to achieve Rs 4,000 crore of annualised cost savings over 18 months.

Vodafone Idea logo on smartphone only screen in focusPicxy
Money Telecom Thursday, October 29, 2020 - 19:08

Vodafone Idea reported a loss of Rs 7,218.2 crore for the July-September, down from Rs 25,460 crore in Q1 of FY21. Its revenue went up by 1.2% quarter-on-quarter to Rs 1,07,912 crore. In the same quarter last year, the telecom operator had posted its biggest ever loss of Rs 50,922 crore. On a year-on-year basis, its revenue was down 0.5%. 

The telecom company said that its Average Revenue Per User is now at Rs 119, up from Rs 114 in the last quarter. Its subscriber base also declined from 27.98 crore to 27.18 crore in the quarter, but it said that gross additions improved as stores reopened. Subscriber churn was at 2.6% during the quarter.

Its 4G subscriber base stands at 10.61 crore, up from 10.46 crore last quarter. Vodafone Idea said that data volumes declined by 4.0% QoQ, as data usage normalised compared to the significantly higher volumes witnessed during the early months of lockdown.

The company said that the effects of the pandemic and the lockdown continued to Q2 as well, but that it witnessed recovery with partial easing of lockdown at state levels, and gradual resumption of economic activities.

“While we continue to face COVID-19 induced challenges, Q2FY21 showed signs of recovery with a gradual improvement in economic activities. We are executing on our strategy and our cost optimization exercise has already started to yield incremental savings. We have also initiated a fund raising exercise to support our strategic intent. Further, we continue to interact with the government seeking long term solutions to the critical challenges, which the industry faces,” said CEO and MD Ravinder Takkar.

Vodafone Idea said it undertook a cost optimisation exercise across the company and plans to achieve Rs 4,000 crore of annualised cost savings over 18 months. “As of Q2FY21, we have already achieved~25% of the targeted annualised cost savings,” the company said in a statement.

A verdict was reached in the AGR matter, with the court allowing companies a 10 year payment period, and had asked for 10% of the amount to be paid before March 2021, following which the 10 year period begins. There is yet to be clarity on whether it is 10% of the total dues or 10% of the remaining dues.

Vodafone Idea said it estimated its liability to be Rs 65440 crore, and have made payments of Rs 6,850 crore upto March 31, and Rs 1,000 crore during the quarter.

“The cumulative amount paid by us till date exceeds 10% of the total liability and accordingly, we believe, the next instalment would be payable only by March 31, 2022,” Vodafone Idea said.

In the previous quarter, Vodafone Idea said that it received waivers for borrowings amounting to Rs 4,500 crore.

“It is to be noted that our ability to continue as a going concern is essentially dependent on successful negotiations with lenders and its ability to generate the cash flow that it needs to settle / refinance its liabilities and guarantees as they fall due,” the statement by the company added.

Last month, the Board approved fundraising of upto Rs 25,000 crore. “Meanwhile, we continue to actively engage with the Government to provide relief on various industry related concerns,” it said.

Ahead of the results announcement, Vodafone Idea’s shares closed down by 3.46% on BSE.

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