NEW DELHI : Vodafone Idea Ltd and Bharti Airtel Ltd have posted record losses in the September quarter, ravaged by an unfavourable Supreme Court verdict that upheld the government’s broader definition of revenue on which it calculates levies on telecom operators.
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 loss is roughly five times its consolidated revenue from operations, which fell to ₹10,844 crore in the September quarter from ₹11,270 crore in the year-ago period.
Rival Bharti Airtel Ltd too posted a massive loss, 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 30 September from a profit of ₹118 crore in the year earlier. Bharti Airtel’s loss exceeded its consolidated revenue from operations, which grew 4.9% from a year earlier to ₹21,131 crore in the September quarter.
The earnings come three weeks after the apex court rejected the contention of telecom operators to exclude revenue from non-core telecom 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.
On Wednesday, DoT asked operators to conduct a self-assessment of dues.
Bharti Airtel said it has made provisions without prejudice to the company’s right to contest DoT’s demands on facts as well as on rights available in law and that the liabilities/provisions as on 30 September aggregate ₹34,260 crore (comprising principal of ₹8,747 crore, interest of ₹15,446 crore, penalty of ₹3,760 crore and ₹6,307 crore as interest on penalty).
“On the 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 that the government will take a considerate view in this matter 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 to the extent required, on terms acceptable to the company, and to raise these amounts in a timely manner,” the company said on Friday. “This represents a material uncertainty whereby, it may be unable to realize 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.”
Vodafone Idea said it is in the process of filing a review petition.
“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. After the Supreme Court judgement on AGR, the telecom operator has recognized a charge of ₹25,677.9 crore in the financial statements.