The company had reported a net loss of Rs 5,004.6 crore at the end of the December quarter, and a net loss of about Rs 4,974 crore in the preceding September-ended quarter. Revenue during the quarter at Rs 11,270 crore declined 4.3% sequentially, after remaining flat in the previous quarter and suffering a decline of 2.2% in the December 2018 quarter. In the March quarter, the company had said that the revenues benefited from the introduction of ‘service validity vouchers’, following 11 consecutive quarters of decline.

Vodafone Idea CEO Balesh Sharma was candid enough to admit, “We are delivering on our stated strategy although the benefits are not yet visible in our top line”. Analysts had said that the benefit from minimum recharge scheme for both Bharti Airtel and Vodafone Idea is more or less complete and is unlikely to provide any sequential revenue uplift in the April-June quarter versus the quarter ended March 31, 2019 — a factor which supported revenues in the last two quarters.

While Bharti will be declaring its results next week, Vodafone Idea’s revenues during the April-June quarter at Rs 11,270 crore was lower compared to Jio’s, after surpassing them for the last two quarters in a row. Ebitda (earnings before interest, tax, depreciation and amortisation) during the period more than doubled to Rs 3,650 crore on a quarter-on-quarter basis adjusted for Rs 1,590 crore one-offs, as the adoption of Ind AS 116 positively benefited Ebitda. Ebitda margin at 32.4% was higher than 15.2% in the preceding quarter, though lower compared to Jio’s 40.1%. The adoption of Ind AS 116 ‘leases’ effective April 1, 2019 resulted in higher depreciation & amortisation and finance cost for the quarter. Adoption of this standard resulted in a positive impact of Rs 120 crore at profit after tax for the quarter.

In line with analyst expectations, the rise in average realisation per user (Arpu) continued during the quarter on a sequential basis due to striking off of low paying 2G subscribers. At Rs 108, Arpu witnessed a 3.8% increase on a q-o-q basis from Rs 104 reported in the quarter ended March 2019, while much above Rs 89 in the December quarter. The churn reduced to 3.7% during the quarter, compared to 7.2% in Q4FY19.

“The sequential trend in both metrics reflects the low-end customer disconnections that occurred during Q4 and Q1 following the introduction of ‘service validity vouchers,” the company said. Consequently, VIL’s subscriber base declined to 320 million from 334.1 million in Q4FY19. However, the telco’s high Arpu subscriber base remained broadly stable. Vodafone Idea said it has taken certain market initiatives to offer a better value proposition to low Arpu customers and to reduce low-end churn, which include introduction of bigger data bundles at Rs 229/255 offering unlimited voice and 2/2.5 GB data per day, to upgrade heavy data users from Rs169/199 plans, which should improve Arpu over time.

Vodafone Idea introduced ‘service validity vouchers’ on a national basis during Q3, which required customers to make a minimum recharge of Rs 35 with 28 days validity. This resulted in a decline of 53.2 million subscribers as low Arpu customers migrated their spending from multiple SIMs to single SIM, taking the overall subscriber base to 334.1 million versus 387.2 million in the previous quarter. In Q3, VIL had lost 35.1 million such customers.

However, VIL’s Arpu still remains below the Arpu of Reliance Jio at Rs 122 and Bharti’s Arpu of Rs 123 reported in the quarter ended March 2019.

On key operating metrics, the data volumes for Vodafone Idea increased 9.3% q-o-q to 32,22,159 million megabytes, the growth was higher compared to a 8.9% increase witnessed in Q4FY19, and about a third of Reliance Jio. The company’s voice traffic, with total volume of 6,76,259 million minutes, was also lower compared to Jio’s, like the previous quarter, after leading the pack for the two quarters before. The voice usage per subscriber at Rs 690 minutes was also lower compared to Jio’s 821 minutes.

During the quarter, VIL received Rs 25,000 crore in proceeds from the successful completion of the rights issue.

The merger of Bharti Infratel and Indus Towers is expected to close by September 2019. Vodafone Idea’s 11.15% stake in Indus has an implied value of about Rs 5,630 crore which it plans to monetise on completion. The company is also exploring options to monetise over 159,000 km of intra-city and inter-city fibre which will provide further financial flexibility.

Vodafone Idea’s capex spend for Q1FY20 was Rs 2,840 crore. Gross debt as at June 30, 2019 was Rs 1.20 lakh crore, including deferred spectrum payment obligations due to the government of Rs 89,180 crore but excluding lease liabilities. Gross debt as at March 31, 2019 was Rs 1.26 lakh crore. Cash & cash equivalents were Rs 21,180 crore resulting in a lower net debt of Rs 99,260 crore versus Rs 1.18 lakh crore in Q4FY19, and Rs 1.15 lakh crore in Q3FY19.