Vodafone Idea, Airtel Suffer Losses Totalling Rs. 74,000 Crores on AGR Dues

Vodafone Idea and Bharti Airtel on Thursday reported a whopping combined loss of nearly Rs. 74,000 crores in the September quarter as the leading telecom players were hit by statutory dues arising from a recent Supreme Court ruling. While Vodafone Idea posted a loss of Rs. 50,921 crores -- the highest-ever quarterly loss by any corporate in India -- Airtel reported loss to the tune of Rs. 23,045 crores. In 2018 December quarter, Tata Motors logged biggest quarterly loss of Rs. 26,961 crores.

Vodafone Idea and Airtel have made provisions for their liabilities arising from the Supreme Court order in their latest September quarter results. The apex court has upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which has to be paid as licence and spectrum fee to the exchequer.

Stung by colossal losses, Vodafone Idea said its ability to continue as a going concern is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy. The company is also in the process of filing a review petition against the Supreme Court order. Vodafone Idea has estimated a liability of Rs. 44,150 crores post the apex court order, and made a provision of Rs. 25,680 crores in the second quarter of the current fiscal.

The company said it has "accounted for the estimated liability of Rs. 27,610 crore related to license fee and Rs. 16,540 crores related to Spectrum Usage Charges up to September 30, 2019, including the interest, penalty and interest... of Rs. 3,3010 crore". In the second quarter of 2018-19, Vodafone Idea reported Rs. 4,874 crores loss.

The company's revenue in the three months ended September 2019 rose 42 percent to Rs. 11,146.4 crores. Meanwhile, Bharti Airtel posted a staggering Rs. 23,045 crores net loss in the latest September quarter due to provisioning of Rs. 28,450 crores in the aftermath of the Supreme Court ruling.

The company said its net loss were on account of exceptional charge pertaining to provisioning of Rs 28,450 crores towards the AGR dues, that included principal of Rs. 6,164 crores, interest of Rs. 12,219 crores, penalty of Rs. 3,760 crores, and interest on penalty of Rs. 6,307 crores.

Airtel CEO for India and South Asia, Gopal Vittal hoped that the government will take a considerate view on the adjusted gross revenue (AGR) matter given the "fragile state of the industry". "On the AGR verdict of the Supreme Court, we continue to engage with the government and are evaluating various options available to us," he said.

Airtel management said it is reviewing its options and remedies available, including filing petitions before the SC and also seeking other reliefs, with others affected in the industry, from the government. Airtel said that the group will need significant additional financing to discharge its obligations under the court judgement. "...However, there can be no assurance of the success of management's plans to access additional sources of finance to the extent required, on terms acceptable to the group and to raise these amounts in a timely manner.

This represents a material uncertainty whereby it may be unable to realise its assets and discharge its liabilities in normal course of business and accordingly may cast significant doubt on the Groups's ability to continue as a going concern," it said. The consolidated revenue of Bharti Airtel was up by 4.7 per cent at Rs. 21,199 crores in the just-ended quarter.

As per latest estimates by Department of Telecommunications, Bharti Airtel faces a liability of around Rs. 62,187 crores (including share of Tata Group of companies and Telenor India), while Vodafone Idea may have to pay about Rs. 54,184 crores. The remaining liability is with state-owned BSNL/ MTNL and some of the shut/ bankrupt telecom companies.

On Wednesday, the DoT shot off notice to telecom operators to pay their revenue share dues within three months as directed by the Supreme Court. The DoT has given option to telecom operators to clear all the dues on self-assessment basis.