Shares of Vodafone Idea declined over 8% in Friday’s session after the telecom services provider posted a loss of Rs 25,000 crore for the quarter ended June 2020.
Auditors raising serious doubts over the company’s ability to continue as a going concern further dented investor sentiment. The report mentioned that Vodafone Idea has lost its entire net worth as of June 30, as a result of the payment of levies and adjusted gross revenue (AGR) dues.
In its notes on the April-June quarterly earnings of Vodafone Idea, the auditor said the assumption of going concern is dependent upon a positive outcome of the company’s and Department of Telecommunications (DoT’s) application with respect to deferred payment of its AGR liability, waiver of debt covenant breaches and its ability to generate or arrange the cash flow that it needs to settle or refinance its liabilities and guarantees as they fall due.
During the quarter ended June 30, 2020 based on Supreme Court judgment of July 20, 2020, the company has further provided Rs 19,440.5 crore and its entire net worth is eroded as at June 30, 2020.
Vodafone Idea on Thursday posted a net loss of Rs 25,460 crore in the June quarter on the exceptional loss of Rs 19,923.20 crore. It had reported a loss of Rs 4,873.90 crore in the same period last year.
The Mumbai-based telecom operator’s revenue from operations fell 8% annually to Rs 10,659.30 crore. Vodafone Idea said that during the quarter, it made a payment of Rs 6,854.40 crore in three instalments to the government’s DoT towards AGR-related dues.
Vodafone Idea’s operations were also adversely affected by the coronavirus pandemic. It’s average revenue per user (ARPU) per month – a key measure of profitability for a telecom company – came down to Rs 114 per month in the quarter ended June 30, from Rs 121 per month in the year-ago period.
Gross debt (excluding lease liabilities) as of June 30, 2020 was Rs 1,18,940 crore, including deferred spectrum payment obligations of Rs 92,270 crore due to the government.
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