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Airtel and Vodafone Idea Record Record Losses in Second Quarter

Vodafone Idea Ltd and Bharti Airtel Ltd reported record losses in the September quarter, devastated by an unfavorable Supreme Court verdict that confirmed the broader definition of government revenue on which it charges telecom operators.

Vodafone Idea's loss in the September quarter increased to 50,922 crore of Rs.4,874 million the previous year as it set aside money to pay government debts following last month's adverse court order. Vodafone Idea's loss is approximately five times its consolidated operating income, which fell to 10,844 crore in the quarter of September Rs 11,270 million in the previous year period.

Rival Bharti Airtel Ltd also reported a massive loss, its second and largest quarterly loss in 14 years, amid a brutal price war unleashed by Reliance Jio that reshaped India's telecommunications market. The New Delhi operator is now Loss of 23,045 crore in the quarter ended September 30, with profit of 118 million in the previous year. Bharti Airtel's loss exceeded its consolidated operating income, which grew by 4.9% over the previous year, to 21,131 million in the quarter of September.

Earnings shock
Earnings shock

The gains come three weeks after the main court rejected telecom operators' contention to exclude revenue from non-essential telecommunications operations such as rent, dividends and interest. The request marked the end of a 14-year legal dispute between the telecommunications department (DoT) and telecommunications operators.

On Wednesday, DoT asked operators to carry out a quota self-assessment.

Bharti Airtel said it has made provisions without prejudice to the company's right to challenge claims from the point of view of facts and rights available by law and that the liabilities / provisions as of September 30 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 the penalty).

“In the Supreme Court's AGR (Adjusted Gross Revenue) verdict, we continue to engage with the government and are evaluating several options available to us. We are hoping that the government will have a thoughtful view on this issue given the fragile state of the industry, "said Gopal Vittal, managing director and CEO of India and South Asia at Bharti Airtel.

Airtel said it would require additional funding to meet the responsibilities arising from the court verdict.

“The company has an established track record of access to diversified sources of financing in markets and currencies. However, there is no guarantee of the success of management's plans to access additional sources of financing as necessary, on terms acceptable to the company, and to increase these amounts in a timely manner, "the company said on Friday." it represents a material uncertainty whereby it may be unable to realize its assets and settle its liabilities in the ordinary course of business and therefore 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 should be noted that our ability to continue as a permanent concern depends on obtaining government benefits, as discussed above, and the positive results of the proposed legal remedy," Vodafone Idea said in a statement on Thursday. Following the Federal Supreme Court judgment of the AGR, the telecommunications operator recognized a 25,677.9 crore in the financial statements.

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