Vi lost 12.4 mn subscribers in the first quarter, most since March-end 2020

Vodafone Idea (Vi) lost 12.4 million subscribers in first quarter FY22, the most since fourth quarter FY20, as the second wave of Covid-19 pandemic hurt its operational and financial performance.

The telecom company had managed to trim subscriber losses in the third and fourth quarters FY21 but it lost 12.4 million subscribers and its customer base shrunk to 255.4 million subscribers in the first quarter FY22.

The sequential fall in 4G subscribers was modest, indicating that most of the subscriber loss was in the low-margin 2G segment. At the end of the June quarter, Vi had 112.9 million 4G customers versus 113.9 million in the previous quarter.

Rival Reliance Jio gained the most from Vi’s falling market share as it added 14.4 million subscribers in the first quarter FY22.

Vi’s loss of 12.4 million customers in a quarter is its second highest since fourth quarter FY 2020 when it lost 12.9 million customers. Overall in the last two years the struggling telecom company has lost 64.6 million customers. In contrast, Jio and Airtel have added 109.3 million and 44 million customers respectively.

The customer base was disclosed along with the company’s financial results, its first under the new chairman Himanshu Kapania, who took charge following the resignation of Kumar Managlam Birla last month. Vi has sought a moratorium from the government for its spectrum dues and worsening financial condition has resulted in credit rating downgrade for its long term loans and non convertible debentures. Its gross debt too has increased sequentially to Rs 1.9 trillion from Rs 1.8 trillion including accrued interest.

The company narrowed its net loss by 71 per cent to Rs 7,319 crore the in first quarter FY 2022 on a year on year basis on account of lower exceptional expenses. In the same period last year it had posted a net loss of Rs 25,460 crore due to provisioning for adjusted gross revenue dues liability. On a sequential basis however it was a weak showing and the loss widened from Rs 7,022 crore due to lower revenue.

Gross revenue declined 14.1 per cent year-on-year to Rs 9,152 crore due to fall in subscribers. Sequentially too, revenue

declined 4.7 per cent from Rs 9,607 crore. While operating expenses dropped YoY, they were higher by 4.7 per cent to Rs 5,444 crore. Earning before interest tax depreciation and amortisation declined 9.5 per cent YoY to Rs 3,707 crore in first quarter FY 2022.

Average revenue per user (ARPU) fell sequentially to Rs 104 from Rs 107 on account of free recharges during the second wave of pandemic and lower usage.

In a statement the company’s managing director and CEO Ravinder Takkar blamed the weak result to significant disruptions caused by the second Covid-19 wave. “ We continue to focus on executing our strategy to keep our customers ahead and our cost optimisation plan remains on track to deliver the targeted savings. We are in active discussions with potential investors for fund raising to achieve our strategic intent,” he said. The company has targeted Rs 4,000 crore of

annualised cost savings and has achieved about 70 per cent of its target on run-rate basis by the end of the first quarter, it said.

Similarly, Vi said it continues to invest in increasing coverage and capacity. During the quarter it added around 6400 4G FDD sites primarily through refarming of 2G/3G spectrum to expand its 4G coverage.

While the company reported a drop in overall and 4G subscriber base, average data consumption per user rose sequentially from 13.06 Gb to 14.9 Gb.

Vi’s total gross debt as of June end stood at Rs 1.91 trillion comprising of deferred spectrum obligations, adjusted gross revenue liability and bank loans.

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