Vodafone Idea Incurs Loss of Rs 50,921 Crore in Q2, Highest Ever Quarterly Fall for Indian Firm
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New Delhi: Telecom operator Vodafone Idea on Thursday reported a consolidated loss of Rs 50,921 crore — the highest ever loss posted by any Indian corporate — for the second quarter ended September 30, on account of liability arising out of the Supreme Court order in the adjusted gross revenue case.
The Supreme Court last month ruled in favour of the government and directed telecom companies, including Vodafone Idea, to pay dues as demanded by the Department of Telecom.
This came on the same day that another telco, Bharti Airtel, posted its highest ever loss of Rs 23,045 crore during the second quarter.
Vodafone Idea said now its ability to continue its business will depend on relief sought from the government and a positive outcome of its legal option. Vodafone Idea's total loss stood at Rs 50,921 crore in the September quarter, as against the Rs 4,874 crore loss in the year-ago period.
The company has an estimated liability of Rs 44,150 crore post the apex court order and made provisioning of Rs 25,680 crore in the second quarter this fiscal. The company also set aside Rs 4,822 crore for certain assets it may not be able to use due to shifting of network from 3G to 4G technology.
Vodafone Idea also derecognised the deferred tax assets amounting to Rs 13,940 crore recorded up to June 30.
The company's revenue rose 42% to Rs 11,146.4 crore during the second quarter this year from Rs 7,878.6 crore in the year-ago period.
"We are 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 relies from the government as discussed above and positive outcome of the proposed legal remedy," the company said in a statement, adding that Vodafone Idea, through the Cellular Operators Association of India ('COAI'), has made representations to the government to provide relief to the telecom sector.
The relief request includes but is not limited to request to not press for the AGR liability payment and grant waivers, not levy spectrum usage charges (SUC) on non-licensed revenue, reduction of license fee and SUC rates, and use of GST credit for payment of government levies.
The industry body has requested the government to allow payments to be made in installments after some moratorium and grant a moratorium of two years for the payment of spectrum dues beyond April 1 next year up to March 31, 2022.
"The government has also taken cognizance of the financial stress on the telecom sector and has recently set-up a Committee of Secretaries to evaluate the telecom operators' plea and suggest measures to mitigate the financial stress," Vodafone Idea said.
British telecom major Vodafone, which holds a majority stake of 45.39% in Vodafone Idea, on Tuesday made provisions for the liability that arose as a result of the court order but capped the group's exposure at Rs 8,400 crore.
Aditya Birla Group holds 27.66% stake in the joint venture, while close to a 28% stake is held by public shareholders.
Vodafone CEO Nick Read has said the British telecom major will not inject any further equity into Vodafone Idea.
As per internal estimates by the telecom department, Bharti Airtel faces a liability of around Rs 62,187 crore (including share of Tata Group of companies and Telenor India), while Vodafone Idea may have to pay about Rs 54,184 crore. The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.
The apex court has given the telecom operators three months to clear their unpaid dues based on its judgement dated October 24.
Vodafone Idea shares tanked to all time low of Rs 2.9 apiece before closing at Rs 2.95 at the BSE on Thursday.