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Vodafone Idea Rallies 7% After Q2 Results Show Narrowing Losses, ARPU Increase

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On Friday, shares of Vodafone Idea climbed as much as 7.1 percent to Rs 8.95 apiece on NSE after the telecom operator reported net loss at Rs 7,203.4 crore for the second quarter of the fiscal year 2020-21, contrastingly lower than Rs 25,467 crore in the previous quarter.

Helped by cost reduction efforts and lower impairment charges, Vodafone Idea was able to raise its revenue by 1.2 percent sequentially to Rs 10,790 crore.

Vodafone Idea Rallies 7% After Q2 Results Show Narrowing Losses, ARPU Increase
 

Further, despite losing eight million subscribers in the three-month period, its average revenue per user (ARPU) (a key performance parameter for telecom operators) rose to Rs 119 from Rs 114 in the previous quarter due to tariff hikes in December and more subscribers opting for higher-cost plans to aid work-from-home facilities.

"While we continue to face COVID-19 induced challenges, Q2FY21 showed signs of recovery with a gradual improvement in economic activities. We are executing on our strategy and our cost optimization exercise has already started to yield incremental savings," said Ravinder Takkar, MD & CEO, Vodafone Idea.

However, there are still risks to its viability considering the fact that it has been consistently losing subscribers to its competitors and is facing difficulty raising funds due to high debt levels.

"It is to be noted that our ability to continue as going concern is essentially dependent on successful negotiations with lenders and its ability to generate the cash flow that it needs to settle / refinance its liabilities and guarantees as they fall due," the operator said in a statement post the results.

The company said that it is currently evaluating various fund-raising options. It plans to raise Rs 25,000 crore via a mix of equity and debt, apart from selling its 11.15 percent stake in Indus Towers to the merged Bharti Infratel-Indus Towers.

Read more about: vodafone idea
Story first published: Friday, October 30, 2020, 10:21 [IST]
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