Vodafone Idea slips 15% on weak operational performance in Q4

In Q4FY21, Vodafone Idea reported a loss of Rs 7,023 crore as against Rs 4,532 crore in Q3FY21

Shares of Vodafone Idea tanked 15 per cent to Rs 8.46 on the BSE in Thursday's intra-day trade after the company reported a weak operational performance in the March quarter (Q4FY21). The stock is part of the future and option (F&O) segment and such stocks don't have circuit limits.

The stock erased partial losses and was down 6 per cent at Rs 9.32 on the BSE around 9.40 am, as against a 0.03 per cent gain in the S&P BSE Sensex. A combined 350 million shares had changed hands on the counter on the NSE and BSE at the time of writing this report.

In Q4FY21, Vodafone Idea reported a net loss of Rs 7,023 crore as against Rs 4,532 crore in the previous quarter (Q3FY21). Average Daily Revenue (ADR), adjusted for Interconnection Usage Charge (IUC) impact, was flat quarter-on-quarter (QoQ).

Reported revenue declined by 11.8 per cent QoQ to Rs 9,610 crore, out of which 9.6 per cent was on account of the abolishment of domestic IUC effective from January 01, 2021. Reported EBITDA margins were up 660 basis points QoQ at 45.9 per cent, aided by one-off gains related to IT and network costs to the tune of Rs 450 crore. Adjusted margins stood at 41.2 per cent and were lower than expectations.

On a reported basis, average revenue per user (ARPU) declined 11.6 per cent QoQ to Rs 107 due to removal of IUC and a 2 per cent like-to-like decline in ARPU, largely attributable to the lower number of days in the quarter.

Vodafone Idea said the cost optimisation underway with a target to achieve Rs 4,000 crore annualized opex savings by December 2021. It achieved around 65 per cent of targeted opex efficiency on run-rate basis. On fundraising, the company is currently in active discussion with potential investors, it said.

Meanwhile, the company's net debt stood at Rs 1.8 trillion as of March 2021 higher than Rs 1.17 trillion in the previous quarter, while its net worth stood at a negative Rs 38,228 crore, as against a negative Rs 31,243 crore in the December 2020 quarter. The sharp increase in debt is because Vodafone had recognised Adjusted Gross Revenue (AGR) dues of some Rs 60,000 crore as debt. The same wasn't treated as debt in Q3FY21.

"The company needs to raise capital as early as possible as its survival hinges on the same. The chances of any reduction in AGR liability look distant. The potential delay in tariff hike is making things tougher for the company," ICICI Securities said in a note.