Vodafone Idea reported a sharply higher loss in its fiscal Q1 as it recognised exceptional charges of INR199.2 billion ($2.65 billion) and saw its subscriber base continue to decline.

India’s second largest operator saw its net loss jump to INR254.6 billion in the April to June quarter, from INR48.74 billion in the same period a year earlier. Revenue fell 5.4 per cent to INR106.6 billion

Exceptional items included INR194.4 billion in adjusted gross revenue liabilities, merger integration costs and one-time spectrum fees.

In a statement, Ravinder Takkar, MD and CEO, Vodafone Idea, said the quarter was challenging as subscriber additions were severely impacted by the closure of retail stores during a nationwide lockdown. This accelerated an ongoing decline, with subs falling 12.6 per cent year-on-year to 279.8 million at end-June.

On the positive side, ARPU continued to improve, rising 7.5 per cent year-on-year to INR114. LTE subscribers rose 23.3 per cent to 104.6 million, while average data usage grew 36 per cent to 13.1GB a month.

Takkar said its merger integration is largely complete, enabling it to realise cost savings well ahead of its initial targets. He stated it launched a new cost optimisation initiative aimed at driving further savings, targeting INR40 billion in annualised opex savings over the next 18 months.

Capex in the quarter dropped to INR6 billion from INR28.4 billion in the same period in 2019 due to Covid-19 (coronavirus) lockdown measures disrupting equipment supplies and logistics. The number of 3G and 4G base stations deployed increased 13.6 per cent year-on-year to 446,100 sites nationwide.

Gross debt, excluding lease liabilities, totaled INR1.189 trillion, including deferred spectrum payment obligations amounting to INR923 billion.