Following stiff competition from Reliance Jio, Vodafone-Idea – India's largest telecom company - reported second-successive quarter of losses, despite working out business synergies and cost optimisation after their merger in August last year. In Q3 (October-December) Vodafone-Idea’s loss was £500.5 million (highest ever quarterly loss) compared to £497.4 million loss in Q2 (July-September). Vodafone-Idea’s revenue in Q3 was £1.18 billion, down 2% on a sequential basis. The going looks tough for the company, which has now cleared plans to raise £2.5 billion to fund expansion and tackle competition. The fund-raising process is in progress, the company said.
Vodafone-Idea said despite tough competition, it is moving comfortably on its business plans post the merger. “We are progressing well on our stated strategy. The initiatives taken during the quarter started showing encouraging trends by end of the quarter,” Balesh Sharma, CEO of Vodafone Idea, said.
He said 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… proceeds from the announced capital raise will put us in a strong position to achieve our strategic goals,” Sharma added.
The company said its subscriber base has come down 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 Rs 35 (28 days validity), contributed to a reduction of 35 million customers in the quarter. ‘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% in the quarter. “We expect to see further positive impact on revenue and ARPU from these actions.” Vodafone-Idea expects tariffs to remain “stable”. “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.”
