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Vodafone Idea, Bharti Airtel feel sting of Supreme Court’s verdict on adjusted gross revenues

Vodafone Idea and Bharti Airtel have reported thousands of crores in losses as the leading telecom players were hit by statutory dues arising from a recent Supreme Court ruling. File

Vodafone Idea and Bharti Airtel have reported thousands of crores in losses as the leading telecom players were hit by statutory dues arising from a recent Supreme Court ruling. File   | Photo Credit: Reuters

Vodafone Idea, India’s second largest telco by number of subscribers, reported a record net loss of ₹50,922 crore, the largest in Indian corporate history, due to a one-time provision of ₹30,774.5 crore made post the Supreme Court’s ruling in favour of the Department of Telecom’s interpretation of adjusted gross revenues (AGR).

“Consequent to the recent judgment by the Supreme Court, we have accounted for the estimated liability of ₹27,610 crore related to license fee and ₹16,540 crore related to spectrum usage charges up to September 30, 2019 including the interest, penalty and interest thereon of ₹33,010 crore,” Vodafone Idea said in a statement.

This estimate was based on demands received from DoT till date, an estimation for the period for which demands had not been raised, together with interest and penalty adjusting for certain computation corrections, it added.

Vodafone Idea, Bharti Airtel feel sting of Supreme Court’s verdict on adjusted gross revenues
 

The loss was reported in spite of a 41.5% increase in revenue to ₹10,844 crore during the quarter. Company’s EBITDA during the quarter stood at ₹3,347 crore.

Explained | Vodafone and Airtel's historic losses
 

Vodafone Idea shares on the BSE declined 20.27% to close at ₹2.95 in a firm Mumbai market on Thursday before touching its 52-week low of ₹2.90, valuing the company at ₹8,477 crore.

Bharti Airtel posts net loss of ₹22,830 crore

Earlier in the day, Bharti Airtel posted a net loss of ₹22,830.1 crore for the quarter that ended September 30 due to the ‘significant financial implication’ following the Supreme Court ruling.

For the quarter, the company, which had posted net profit of ₹249.2 crore in Q2 of last year, recognised exceptional items of ₹22,394.4 crore (net of tax). It provided for an additional amount of ₹28,450 crore for licence fee as estimated based on the apex court judgment and spectrum usage charges as estimated based on the definition of AGR.

Vodafone Idea, Bharti Airtel feel sting of Supreme Court’s verdict on adjusted gross revenues
 

These provisions have been made without prejudice to the company’s right to contest DoT’s demands on facts as well as on rights available in law,” it said, adding it was hopeful of relief. The Supreme Court, in its order on October 24, ruled in favour of DoT, while directing telecom operators to pay their statutory dues within three months.

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Printable version | Sep 22, 2020 10:55:01 PM | https://www.thehindu.com/business/vodafone-idea-bharti-airtel-feel-sting-of-supreme-courts-verdict-on-adjusted-gross-revenues/article29975390.ece

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