Mumbai: Vodafone Idea Ltd., the beleaguered Indian wireless carrier facing a government demand for billions of dollars in back fees, reported an eighth straight quarterly loss and said a court verdict on a staggered payment plan for the dues is critical for survival.
Net loss was 254.6 billion rupees ($3.4 billion) in the three months ended June, the country’s No. 3 mobile phone carrier said Thursday. It took a one-time charge of 194.4 billion rupees for back fees paid.
The operator, formed by the merger of Vodafone Group Plc’s local unit with billionaire Kumar Mangalam Birla’s Idea Cellular Ltd., hasn’t reported an annual profit since the deal was announced in 2017. Birla warned in December that the venture was headed for insolvency in the absence of government relief with the dues, which are related to an October Supreme Court ruling.
Key Insights
- Vodafone Idea is losing subscribers to rivals as it trims coverage to cut costs and has so far failed to win better payment terms from the government on the money it owes. Net debt was 1.2 trillion rupees as of the quarter ended June.
- The company’s net worth has turned negative, it said in the statement.
- Even before the court ruling, the carrier had been reporting losses amid cutthroat competition unleashed by Reliance Jio Infocomm Ltd., which offered free voice and cheap data packages to lure subscribers.
- In June, Vodafone Idea said paying dues in tranches was the only way to stay afloat and that its financial state was “precarious.” Net losses over the three years prior to the quarter ended June totaled 930.5 billion rupees.
Market Reaction
- Vodafone Idea shares have more than doubled over the past three months as retail investors bet it would be able to pay the dues and recover. The stock fell 0.6% to 8.25 rupees on Thursday before the earnings were announced.- Bloomberg
Also read: Vodafone Idea reports highest ever net loss by Indian firm of Rs 73,878 cr in FY 2020
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