Bharti Airtel, Vodafone Idea report record losses in Quarter 2
Vodafone Idea’s loss for the September quarter widened to ₹50,922 crore from ₹4,874 crore in the year earlier, as it set aside money to pay dues to the government following last month’s adverse court order.Updated: Nov 15, 2019 05:35 IST
Vodafone Idea Ltd and Bharti Airtel Ltd have posted record losses in the September quarter, ravaged by an unfavourable apex court order that upheld the government’s broader definition of revenue on which it calculates levies on telecom firms.
Vodafone Idea’s loss for the September quarter widened to ₹50,922 crore from ₹4,874 crore in the year earlier, as it set aside money to pay dues to the government following last month’s adverse court order. Vodafone Idea’s consolidated revenue from operations fell to ₹10,844 crore in the September quarter from ₹11,270 crore in the year-ago period. Rival Bharti Airtel Ltd too posted its highest and second quarterly loss in 14 years, amid a brutal price war unleashed by Reliance Jio that has reshaped India’s telecom market. The New Delhi-based operator swung to a ₹23,045 crore loss in the quarter ended September 30 from a profit of ₹118 crore in the year earlier.
The earnings come three weeks after the apex court rejected the contention of telcos to exclude revenue from non-core operations such as rent, dividend and interest income. The order marked the end of a 14-year legal tussle between the department of telecommunications (DoT) and telecom operators.
Airtel said it made provisions without prejudice to the firm’s right to contest DoT’s demands on facts as well as on rights available in law and that the liabilities/provisions as on September 30 aggregate ₹34,260 crore. “On AGR (adjusted gross revenue) verdict of the Supreme Court, we continue to engage with the government and are evaluating various options available to us. We are hopeful the government will take a considerate view, given the fragile state of the industry,” said Gopal Vittal, managing director and CEO for India and South Asia at Bharti Airtel.
Airtel said it would require additional financing to meet the liabilities arising from the court verdict. “The company has an established track record of accessing diversified sources of finance across markets and currencies. However, there can be no assurance of the success of management’s plans to access additional sources of finance ... and to raise these amounts in a timely manner,” the company said. “This represents a material uncertainty whereby, it may be unable to realise its assets and discharge its liabilities in the normal course of business, and accordingly may cast significant doubt on the company’s ability to continue as a going concern.”
“It is to be noted that our ability to continue as a going concern is dependent on obtaining the reliefs from the government as discussed above and positive outcome of the proposed legal remedy,” Vodafone Idea said in its statement on Thursday.