Vodafone Idea shares drop 5% on weak Q4 earnings

Stock Market

Shares of Vodafone Idea declined as a lot as 4.90% on Wednesday after the corporate reported a consolidated web lack of 11,643.50 crore in Q4FY20, almost thrice larger than net loss of 4,881.90 crore within the fourth quarter of FY19.

At 2:45 pm, Vodafone Idea was buying and selling at 10.22 down almost 4% from its earlier shut, whereas the benchmark index, Sensex superior 1.4% to 35,395.35 factors.

Telecom operator’s consolidated income from operations fell 0.17% to 11,754.20 crore in Q4 FY20 versus 11,775 crore in Q4 FY19. Pre-tax loss stood at 11,742.60 crore in interval beneath overview towards 6,758.90 crore in Q4 FY19.

Vodafone Idea’s subscriber base declined to 291 million within the fourth quarter ending 31 March from 304 million in Q3FY20. Subscriber churn remained steady in Q4 FY20 at 3.3%. Company’s common income per person (ARPU) for Q4 improved to 121, a 12 appreciation from 109 in Q3FY20, pushed by the pay as you go tariff hike efficient from December 2019.

According to analysts at Angel Broking, “ARPU for March quarter improved to Rs.121 towards Rs.109 in December quarter, as a consequence of pay as you go tariff hike efficient from Dec’19. Vodafone Idea’s capability to proceed as a going concern is extremely dependent on a constructive final result on AGR matter earlier than the Supreme Court for the cost in installments. A beneficial ruling, enchancment in ARPU, discount in lack of market share and any main funding by a giant tech investor would be the key triggers for upside within the inventory.”

On the adjusted gross income (AGR) matter, the division of telecommunications (DoT) has proposed to stagger the cost of 58,254 crore dues over 20 years. However, Vodafone Idea claims that 45,960 crore AGR dues are pending. The firm desires a 20-year timeframe to pay these dues, that it claims now stand at 39,106 crore after it paid 6,854 crore throughout the March quarter. The Supreme Court will hear the matter subsequent within the third week of July.

Analysts at Motilal Oswal in outcome overview mentioned “Vodafone Idea’s weak cash position with outstanding cash and equivalents of 2,660 crore in FY2020E and would be insufficient to service estimated cash requirement of 13,500 crore in FY2021/2022. It needs 50% big price hike to generate potential EBITDA of 25,000 crore to garner sustainable cash flows”. The brokerage has a beneath overview on the inventory, till a readability on the corporate’s enterprise continuity.

Commenting on the Q4 efficiency, Ravinder Takkar, the managing director (MD) and chief govt officer (CEO) of Vodafone Idea, has mentioned that: “Our focus on rapid network integration, as well as 4G coverage and capacity expansion, has further improved customer experience. On the AGR matter, the next hearing is scheduled with the Honorable Supreme Court in the third week of July”.

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