Staring business closure over rising debt, the Vodafone Idea (Vi) in another blow to all its recovery plans, posted a loss of Rs 7312.9 crore in the fiscal first quarter compared to Rs 6985.1 crore in the previous quarter.
The company already is saddled with high debt and now the slowdown in economic activities has dragged down its revenues. At present, the company is the third-largest telecom operator by market size.
Now the company’s recovery plan has faded more as there is no clear viability over raising new funds to pare debts. This also depends on the status of statutory dues that it owes the government, and also on other factors such as negotiations with lenders on better terms for repayment.
“The Company’s financial performance has impacted its ability to generate the cash flow that it needs to settle/ refinance its liabilities and guarantees as they fall due, which along with its financial condition, is resulting in material uncertainty that casts significant doubt on the Company’s ability to make the payments mentioned therein and continue as a going concern,” India’s only loss-making private operator said.
Total quarterly revenue for the cash-strapped operator fell to Rs 9152.3 crore in April-June from Rs 9,607.6 crore when compared sequentially, the company said in a notice to the stock exchanges on Saturday.
Adjusted gross revenue (AGR), is the moot issue between the Department of Telecommunications (DoT) and Vi, and the telco has filed a review petition in the Supreme Court against DoT’s calculation ‘errors”.
Earlier the DoT has asked for Rs 58,254 crore from Vi, of which the telco has paid Rs 7,854 crore. The telco Saturday said that as of June end, its AGR liabilities, including interest, stood at around Rs62,180 crore, according to DoT’s calculations.
Vi said that the total debt of the Group stands at Rs 191,588.8 crore of which the next instalment of the AGR liability – of around Rs 9,000 crore – and debt amounting to Rs 16,853.4 crore is payable in the next 12 months.
The results are the first after Aditya Birla Group chairman Kumar Mangalam Birla quit as Vodafone Idea non-executive chairman and as a director on the board. His resignation had come less than two months after he wrote to the government that he is willing to give up his stake in Vi to any government entity, which can ensure the telco’s survival.
Earlier both parents – Vodafone Group and the ABG – though have refused to infuse fresh equity into the cash-strapped telco. The company had cash & cash equivalents of Rs. 9.2 billion at June end.
“The said assumption of going concerned is essentially dependent on its ability to raise additional funds …successful negotiations with lenders for continued support/additional funding, monetization of certain assets, the outcome of the review petition filed … Supreme Court and clarity of the next installment amount, acceptance of its deferment request by DoT and generation of cash flow from its operations that it needs to settle/renew its liabilities/guarantees as they fall due,” Vi said.
In its review petition, Vi said it has ‘outstanding utilized facilities’ of approximately Rs 47,000 crore from banks, non-banking finance companies (NBFCs), and mutual funds, of which Rs 25,000 crore is from public sector banks, over and above the amount due to DoT.
“As a result of earlier rating downgrades, certain lenders had asked for an increase of interest rates, and additional margin money/security against existing facilities. The Group has exchanged correspondences and continues to be in discussion with the lenders for the next steps/ waivers,” Vi said.
The company needs to provide additional bank guarantees of Rs 975.7 crore to avail additional moratorium of one year on spectrum installments for November 2012, February 2014, and October 2016 auctions, amounting to Rs 6439.2 crore. Guarantees amounting to Rs 13,358 crore are due to expire during the next 12 months.
The company said its subscriber base declined by 12.3 million to stand at 255.4 million subscribers as against rivals Jio and Airtel who have 440.6 million and 321.23 million, respectively. The telco said pandemic-related lockdowns impacted gross additions but despite that, its 4G user base was steady at 112.9 million 4G customers.