(Vi) shares plunged nearly 15% after its March quarter losses widened to almost Rs 7,000 crore and there was no news of any fund raise, with analysts saying the cash-strapped telco faces a grim battle for survival.
In afternoon trade, the stock was trading 9.4% lower at Rs 9.02, a day after Vi’s March quarter net loss widened to Rs 6,985.1 crore, stung by an exceptional loss, continuing subscriber losses and high depreciation, amortization and finance costs, even as the absence of interconnection usage charges (IUC) reduced revenue 12% sequentially.
“High depreciation and amortization charge and finance costs meant the company continued to report PBT losses (excluding one off gains or losses). Additionally, company also recognized impairment loss of Rs7.2 billion on the Vodafone brand following the launch of integrated brand (V!),” brokerage Credit Suisses said in a note.
It added that Vi’s cash generation remains inadequate and its cash balance remains “precariously low,” adding that the telco needs a “meaningful capital infusion on an urgent basis to break out of the vicious loop of under-investment and market share loss”.
CLSA backed the view, saying “Vi with $24 billion in debt, of which 88% is for spectrum and AGR, is headed for a financial crisis in FY23 when annual payments towards spectrum and AGR become due”.
The telecom JV between UK’s Vodafone Plc and Aditya Birla Group had announced a Rs 25,000-crore fundraising plan last September via a mix of equity and debt, which hasn’t yet been finalised despite holding talks with various potential global investors over several months.
Analysts estimate that without a capital raise, Vi’s ARPU would need to be higher by Rs 110, or twice current levels for it to be FCF (free cash flow) neutral. In the March quarter, Vi’s ARPU was at Rs 107, lower than Rs 121 clocked in the third quarter, FY21.
Going forward, Goldman Sachs estimates upto 30% cuts in Vi’s capex spends in FY22/23, and expects its annual capex to be at least $1 billion lower than Airtel’s.
Vi’s March quarter capex at Rs 1,540 crore was way below Airtel’s Rs 6,846.5 crore. Jio’s network opex spends during the period were at Rs 5,754 crore.
Swiss brokerage UBS, though, said “Vi’s improving trend of 4G subscriber additions is positive,” and progress in the fundraising exercise should bode well for the company. The telco added over 4 million 4G users in the March quarter.