New Indian market leader Vodafone Idea registered a huge loss for its first quarter of operation following the merger of Vodafone India and Idea Cellular.
In reaction to this, the company has established a committee to explore new routes for generating capital. It is aiming to bring it around INR250 billion ($3.5 billion), although roughly 75% of this will be derived from its major shareholders, Aditya Birla Group and Vodafone Group.
“The board remains optimistic about the long-term outlook for the market and the future for the business, and recognises that further equity funding is required in order to ensure that the company has sufficient balance sheet flexibility to successfully execute its strategy”, said the operator in a statement.
The merger between Vodafone India and Idea Cellular closed in late August. With a combined subscriber base of over 400 million, the new entity took first place in India’s mobile market. Since its fiscal Q2 ended on 30th September, the operator’s results are an anomaly as they factor in a one-off fee of INR5.66 billion to cover costs related to the merger. Including this amount, Vodafone Idea’s after-tax loss for the quarter stood at INR49.7 billion.
During the quarter, Vodafone Idea saw reported revenue of INR76.6 billion and pro-forma revenue of INR120 billion – a decrease of 7.1%. The operator ended the quarter with 422 million subscribers – 13 million fewer than it started with. Its ARPU declined by 4.7% from the previous quarter as customers opted for lower tariffs.
Vodafone Idea CEO Balesh Sharma said: “We remain focused on accelerating integration momentum for higher synergy realisation; expanding coverage and capacity of our 4G network; providing the best of customer experience to our retail and enterprise customers; and in creating an agile and future-fit organisation.”
The operator is expanding its broadband coverage across India; it noted that with the addition of almost 24,900 3G and 4G sites in its fiscal Q2, it now delivers broadband to 261,000 towns and villages, encompassing 817 million people.