Vodafone Idea (VIL) on Thursday reported widening of losses to Rs 6,438.8 crore in the third quarter of 2019-20 against Rs 5,004.6 crore a year ago, as the AGR-hit telco continued to sound out warnings on "material uncertainty" casting "significant doubt" on its ability to continue as going concern.
The company's ability to continue as a going concern is essentially dependent on a positive outcome of its modification application in the Supreme Court on the AGR matter and any relief from the Telecom Department on payments, it said.
The comments come at a time when VIL is staring at statutory dues of Rs 53,000 crore it needs to pay to the government. Confronted by these liabilities - Rs 24,729 crore of spectrum dues and another Rs 28,309 crore in licence fee - it had previously warned of shutdown if no relief was granted.
The losses for the just-ended quarter widened to Rs 6,438.8 crore in October-December 2019 against Rs 5,004.6 crore in the year-ago period. For the three months ended December 2019, the company's total income fell by 5 per cent to Rs 11,380.5 crore from Rs 11,982.8 crore a year ago.
The finance costs of the company rose almost 30 per cent to Rs 3,722.2 crore, while depreciation went up by 23 per cent to Rs 5,877.4 crore.
Seen sequentially, however, the company's losses are a fraction of the staggering Rs 50,922 crore loss suffered in the September quarter (highest ever loss posted by any Indian corporate), when it had made provisions for statutory dues following the Supreme Court's order in the adjusted gross revenue matter.
VIL said its revenue grew by 2.3 per cent quarter-on-quarter supported by strong growth in 4G additions.
VIL's 4G subscriber base now stands at 104.2 million, the company said adding that 4G net additions accelerated to 8.3 million during the quarter. Overall, the subscriber base declined to 304 million in December quarter from 311 million in the previous sequential quarter.
The average revenue per user - a key operational metrics for telecom companies - improved to Rs 109 in December from Rs 107 in the previous quarter "supported by improved customer mix". Its gross debt (excluding lease liabilities) as of December 31, 2019 was Rs 1,15,850 crore, including deferred spectrum payment obligations due to the government of Rs 88,530 crore.
VIL - formed from the merger of Idea Cellular and Vodafone in 2018 - said that its integration is progressing well and is expected to complete by the first quarter of FY21. As of December 2019, network integration has been completed in 86 per cent of total districts.
Commenting on the earnings, Ravinder Takkar, the MD and CEO of Vodafone Idea, said, "We continue to actively engage with the government seeking relief on the AGR and other matters. Post dismissal of our review petition, we have filed for modification of the supplementary order with the Supreme Court".
He asserted that the company remains focused on network integration as well as 4G coverage and capacity expansion in key markets.
"... after several quarters of pressure on topline, we witnessed consistent revenue turnaround from September onwards that is before the recent price hikes. The tariff increase effective December should further help in improving revenue performance going forward," he said.
The company mentioned that during the quarter the credit rating of certain borrowings had been revised. As a result, certain lenders have asked for an increase of interest rates, and that if the company does not agree to increase the rates, it has the option to prepay.
"...material uncertainty exists that cast significant doubt on the company's ability to continue as a going concern and its ability to generate the cash flow that it needs to settle or refinance its liabilities including those relating to SC AGR judgement and guarantees as they fall due," it said.
Vodafone Idea shares ended at Rs 4.48 apiece on Thursday on the BSE, 0.67 per cent lower than the previous close.
On AGR dues, the VIL statement said that the company, during this quarter, adjusted the estimated liability for subsequent demands received, errors in computation, applicable interest for this quarter, past payments not considered in the government's demands and other adjustments.
"Accordingly, the net impact of these effects amounting to Rs 528 million has been recognized as exceptional items during the quarter. Further, as directed by the Telecom Department, the company is undertaking a self- assessment exercise for computation of liability as per the AGR judgment," the statement said.
In all, as many as 15 entities owe the government Rs 1.47 lakh crore -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.
These dues arose after Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.
After their review petitions were dismissed by the apex court, Bharti Airtel, Vodafone Idea, and Tata Teleservices jointly filed a modification application in the Supreme Court seeking more time to pay statutory dues. The apex court is likely to hear the AGR case on Friday.
Only last week, Vodafone Chief Executive Officer Nick Read had said that the situation in India is critical, following the AGR ruling of the Supreme Court. The British telecom major holds 45.39 per cent stake in VIL.
Rival Bharti Airtel's liabilities add up to nearly Rs 35,586 crore, although the Sunil Mittal-led company has made it clear that the previously mentioned material uncertainty on the group's ability to continue as a going concern "no longer exists" after its recent fundraising.
Besides VIL and Bharti Airtel, most of the remaining AGR liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.
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