Vodafone Idea has lost nearly a billion dollars every three months this year

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Vodafone Idea has lost nearly a billion dollars every three months this year
Vodafone Idea has lost nearly ₹80 crore per day for the first nine months this yearBCCL
  • Vodafone Idea has lost nearly ₹80 crore a day in the first nine months of 2021.
  • In addition to this, the company’s cash reserves fell nearly four times in the past three months.
  • It is reportedly in talks with lenders to recast its loans and a stay on its interest payments.
How much trouble is Vodafone Idea India’s third largest telecom provider, facing? It has lost nearly a billion dollars every three months in 2021 so far.

Over the past nine months, Vodafone Idea posted net loss of ₹21,474 crore – that’s nearly ₹80 crore every day for nine months straight, going on to show just how much it is struggling.

Vodafone Idea has lost nearly a billion dollars every three months this year
Vodafone Idea's losses continue to mountVodafone Idea / Business Insider India / Flourish

According to a previous report. Vodafone Idea is in talks with its lenders, including a consortium led by the State Bank of India (SBI) for a recast of its loans.
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"After the government extended relief to the telco, lenders believe that uncertainty over its future is over for now," said an official aware of the discussions.

Losses are mounting but average revenue per user isn't



Vodafone Idea has lost nearly a billion dollars every three months this year
Average revenue per user continues to remain sluggishVodafone Idea / Business Insider India / Flourish

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The company, though, sees signs of recovery. "During the last quarter, we witnessed a recovery in our operating momentum as the economy has started to gradually open up aided by the ongoing rapid vaccination drive," said Ravinder Takkar, MD & CEO, Vodafone Idea.

This seems optimistic in part – Vodafone Idea’s average revenue per user (ARPU), one of the core metrics to judge the performance of telecom companies, grew 5% when compared to the previous quarter.

However, if we go back further, Vodafone Idea’s ARPU has been hovering in this range since the removal of interconnect usage charges (IUC).

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Vodafone Idea has lost nearly a billion dollars every three months this year
Vodafone Idea's ARPU remains significantly lower than Jio and Airtel'sVodafone Idea / Business Insider India / Flourish

To put things in context, Vodafone Idea’s ARPU has only barely recovered after the massive fall in the March 2021 quarter.

This increase was driven by the fact that the telco increased its entry level prepaid plan to ₹79 from ₹49, in addition to tariff hikes in certain postpaid plans.

But there’s another factor that has helped the beleaguered telco post a recovery in this metric – a 3.6% increase in the number of 4G subscribers. 4G subscribers usually pay more for consuming faster data services than 3G and 2G subscribers, so this means they bring in more revenue, thereby boosting the company’s topline.
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One area that remains concerning is the company’s cash reserves, which fell nearly four times to ₹250 crore when compared to the previous quarter’s ₹920 crore. Net debt, on the other hand, stood at ₹1.94 lakh crore, versus ₹1.91 lakh crore in the previous quarter.

Vodafone Idea also lost 2.4 million subscribers in the previous three months, but overall, its subscriber churn has slowed down considerably when compared to the previous quarter when it lost over 10 million users.

SEE ALSO:

After relief from Indian government, Vodafone Idea reportedly turns to banks for a loan recast

Vodafone Idea and Airtel need tariff hikes, AGR moratorium might not be enough, say analysts

Airtel, Vodafone Idea and Jio welcome telecom relief package, but analysts are divided on whether it is enough
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