Vodafone Idea, the largest mobile player in India after its recent merger, reported a massive loss in its first quarter of operation and said it will explore raising up to INR250 billion ($3.5 billion) in new capital.

The operator said its board set up a committee to evaluate potential routes for raising fresh equity, with nearly three-quarters to come from its two main shareholders, Vodafone Group and Aditya Birla Group.

In a statement Vodafone Idea said: “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.”

An after-tax loss of INR49.7 billion in the operator’s fiscal Q2 2019 ending 30 September included a one-time charge of INR5.66 billion, which mainly covered integration and merger-related costs. Reported revenue stood at INR76.6 billion in the quarter, while pro-forma revenue fell 7.1 per cent sequentially to INR120 billion.

In late August Vodafone India and Idea Cellular completed their long-awaited merger, creating the country’s largest mobile operator with more than 400 million subscribers. The results are not comparable to earlier periods because they cover Idea Cellular during the period up to 30 August and Vodafone Idea from 31 August to 30 September.

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 lost 13 million subscribers in the quarter to end September with 422 million subs. It said headline tariffs remained stable in the quarter, but customer migration to lower ARPU offerings led to a 4.7 per cent quarter-on-quarter decline in ARPU to INR88.

Data usage per customer increased to 5.6GB per month from 5GB the previous quarter, while its overall broadband customer base rose to 99.7 million, a net addition of 4.4 million. Broadband subscriber penetration reached 23.6 per cent at end-September.

Expanded coverage
The company said its broadband coverage is now available in around 261,000 towns and villages, covering about 817 million people or 67.6 per cent of the population.

Capex in the quarter totaled INR33 billion. It added nearly 24,900 3G and 4G sites during the quarter, taking the overall count to 365,575.

The company also said it would actively explore the sale of its fibre network, noting several parties indicated a interest in acquiring the assets which consist of more than 156,000km fibre routes.

Vodafone Group, with a 45 per cent share in the merged company, said a €7.8 billion loss in the six months to end-September included a €3.4 billion dip from stripping Vodafone India out of its figures, following the merger.