Analysts have sounded an alarm over the weak vitals of Vodafone Idea (VIL) submit its first quarter outcomes that indicated subscriber losses, ARPU declines, quick deteriorating cashflow and balance-sheet issues, as a number of market watchers famous that authorities or regulatory help is ‘vital’ for its viability amid upcoming fee obligations.
In its word ICICI Securities mentioned it sees “high risk and huge concern for VIL” and that within the wake of rising uncertainties, it has put VIL’s estimates, score and goal value under-review till additional readability.
“We believe existing operation is unlikely to meet upcoming payouts, and risk of default cannot be ruled out, the much anticipated tariff hike/s and capital infusion have been insufficient,” it mentioned flagging the quick deteriorating cashflow and rising liabilities.
The outcomes point out that Vodafone Idea continues to face structural headwinds, BofA Securities mentioned.
“Unless government steps in to aid, we see risks of India turning to be a two player market,” it mentioned.
The risk-reward is “unfavourable” given restricted readability on tariff hike and funding, BofA Securities mentioned in its report.
Vodafone Idea misplaced 12.4 million subscribers in Q1 FY22 (versus 2 million loss in 4Q FY21) on account of lockdown and restricted retailer timings, it cited.
VIL’s Q1 outcomes have been under estimates and have been impacted by Covid-19, UBS mentioned observing that the telco continues to lose market share.
“While the company had started showing signs of stability in previous quarters, especially on the 4G front, this was reversed during the quarter as a result of the impact of second wave of Covid,” UBS mentioned.
Consequently, Average income Per User (ARPU) declined by three per cent sequentially from Rs 107 to Rs 104.
“ARPU still remains meaningfully lower than Bharti and Jio’s ARPU of Rs 146 and Rs 138, respectively,” UBS report famous.
The firm stays in a “critical” place when it comes to liquidity, with FY22 money flows (even assuming minimal or no capex) unlikely to be ample to fulfill upcoming reimbursement obligations, UBS opined.
Progress within the fund elevating train and potential reduction bundle from the federal government are key, it added.
Goldman Sachs word cautioned: “We note that the company has large repayments due starting December 2021, and at the current EBITDA (earnings before interest, taxes, depreciation, and amortisation) run-rate, we estimate Vodafone Idea could have a Rs 238 billion (USD 3.2 billion) cash shortfall until April 2022.”
Vodafone Idea — which is struggling to remain afloat — posted its Q1 earnings on Saturday. The whole gross debt (excluding lease liabilities and together with curiosity accrued however not due) as of June 30, 2021 of VIL stood at Rs 1,91,590 crore, comprising of deferred spectrum fee obligations of Rs 1,06,010 crore and adjusted gross income (AGR) legal responsibility of Rs 62,180 crore which can be as a result of authorities.
The debt-ridden telco posted a decrease consolidated lack of Rs 7,319 crore for the primary quarter ended on June 30, 2021, towards Rs 25,460 crore loss in the identical quarter a 12 months in the past.
The consolidated income from operations declined by about 14 per cent to Rs 9,152.3 crore in the course of the reported quarter from Rs 10,659.3 crore within the corresponding quarter of 2020-21.
Billionaire Kumar Mangalam Birla just lately stepped down as chairman of Vodafone Idea Ltd, inside two months of providing handy over Aditya Birla Group’s stake within the debt-laden telco over to the federal government, in a bid to avert a disaster for the troubled telecom firm.
Last week, Vodafone Idea filed a assessment petition in Supreme Court, after the apex court docket just lately dismissed its plea for rectification of the alleged errors within the calculation of adjusted gross income (AGR) associated dues.
In its assessment petition, VIL has mentioned it’s “a travesty of justice” that the corporate is restrained from questioning the arithmetical errors/omission that are going to price it about Rs 25,000 crore (Rs 5,932 crore of principal plus curiosity, penalty and curiosity on penalty).
Vodafone Idea has mentioned that its contentions have been rejected by the order below assessment and added that this denial might end result within the firm going below and its about 27.3 crore subscribers being left “high and dry”. Other fallouts embody lack of funding within the enterprise and an affect on livelihoods of staff, in addition to distributor, retailers, and retailer employees, the corporate has mentioned.