Data

Data: Why the AGR ruling is double whammy for Vodafone-Idea and Airtel

In a big blow to the private telecom operators Vodafone Idea Limited and Bharti Airtel Limited, the Supreme Court has ruled against the private telcos in over ₹90,000 crore adjusted gross revenue (AGR) issue.

In a big blow to the private telecom operators Vodafone Idea Limited and Bharti Airtel Limited, the Supreme Court has ruled against the private telcos in over ₹90,000 crore adjusted gross revenue (AGR) issue.   | Photo Credit: Prashant Nakwe

The telecom giants were already facing dwindling revenues because of Reliance Jio

Vodafone-Idea and Airtel posted their highest-ever quarterly losses in Q2 FY20. The losses can be attributed to the provisions made after the Supreme Court judgment in October which changed the definition of Adjusted Gross Revenue. The ruling has come as a double whammy as their revenues were already dwindling due to a price war with Reliance Jio.

Record Losses

The losses of Vodafone-Idea and Airtel in the last quarter together amounted to Rs 7,40,675 million while Reliance Jio continued to post profits. The graph shows the “profit/loss from ordinary activities before tax” in Rs million for the three companies.

Tale of opposites

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Spike in usage

Since Jio’s inception in 2016, both data usage and call time, increased substantially due to the very low tariff charged by the company. Many subscribers moved to Jio from Vodafone-Idea and Airtel.

Increase in use

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Drop in revenue

Despite exponential rise in subscribers and consequently in data and call usage, the companies’ revenue from those services dropped because both Airtel and Vodafone-Idea reduced their tariffs to arrest the customer outflow to Jio.

Falling revenue

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No money spinner

Due to cheap data and applications which allowed Internet calls, revenue from mobile calls and SMS hit rock bottom in recent quarters. The recent data boom failed to yield similar revenue due to Jio’s disruptive pricing. The graph shows the average revenue per user per month in Rs.

Calls and SMS take a hit

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Printable version | Jul 7, 2020 12:19:00 PM | https://www.thehindu.com/data/why-the-agr-ruling-is-a-double-whammy-for-vodafone-idea-and-airtel/article30087215.ece

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