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Voda-Idea loss triggers Rs 21.5K cr m-cap loss in Birla firms
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SME Times News Bureau | 21 Aug, 2019
The unabated losses at Vodafone-Idea are eroding the value of other
Aditya Birla Group firms, whose combined m-cap declined by a whopping Rs
21,431 crore on August 20, days after the quarterly results of the
telecom arm were announced on July 29.
On August 19, the company
posted lacklustre subscriber numbers having lost 41 lakh customers. Soon
after, it was announced that the company CEO Balesh Sharma will be
replaced by Ravinder Takkar.
Vodafone-Idea shares fell 6 per
cent on the BSE in Tuesday's session, a day after Sharma resigned with
immediate effect, less than a year into his job. On Wednesday, its
shares were down 2.57 per cent on the BSE.
The mobile phone
company share price is at an all-time low amid piling losses and a
receding subscriber and revenue base. Analysts say further erosion is
likely as Jio is racing past to overtake Vodafone in subscribers numbers
in the next 4-5 months after edging out Airtel.
In June, the
telco had a market cap of about Rs 40,000 crore. Vodafone-Idea reported a
net loss of Rs 4,873.9 crore during the April-June 2019 quarter, its
10th loss in the last 11 quarters.
On July 29, the total m-cap of
all Aditya Birla Group companies stood at Rs 2.69 lakh crore. On August
20, the same had declined to Rs 2.31 lakh crore.
The telecom
major, whose m-cap now stands at Rs 16,781 crore, has lost Rs 2,673
crore in its m-cap since July 29 wiping out most of the gains it made
after it raised Rs 25,000 crore by way of a rights issue in May this
year.
The sharpest m-cap fall was Rs 9,195 crore in Ultratech
Cement followed by Grasim Industries, the flagship company of the Aditya
Birla Group, which saw the m-cap falling from Rs 52,310 crore on July
29 to Rs 47,967 crore in August 20.
It was the biggest fall in Grasim share prices in the last two years, a cascading effect of the poor Vodafone-Idea results.
Grasim
was the single largest promoter-shareholder of Vodafone-Idea with 11.55
per cent stake in the company at the end of June 30. In all, Birlas
owned 27.18 per cent stake in the telecom joint venture.
The
company owns a majority stake in UltraTech Cement, Aditya Birla Capital
and Aditya Birla Money and is a minority shareholder in Hindalco
Industries and Aditya Birla Fashion, other two key Aditya Birla Group
companies.
The current developments are likely to reduce
Grasim's financial room if it is to make an incremental equity
investment in Vodafone-Idea to compensate for its losses as it did in
the recent past. The continued losses in Vodafone-Idea have already led
to a huge decline in the market value of Grasim's equity investment in
the telco.
The Vodafone India-Idea merger was triggered by the
price war that broke out after Mukesh Ambani-owned Reliance Jio started
services in September 2016. Vodafone-Idea losses have continued since
the merger -- almost Rs 4,900 crore in the April-June quarter on a
revenue of Rs 11,269.9 crore -- below Jio's Rs 11,679 crore revenue for
the first time.
Since August 31, Vodafone-Idea's stock prices
have fallen 81 per cent and the company has lost almost 90 million
subscribers as mainly low-paying users moved to Jio, shrinking its
market share to less than 33 per cent from 41 per cent.
Its revenue market share has hovered at about 32 per cent since the merger, slightly ahead of Jio and Airtel.
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As on 13 Aug, 2022 |
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