Vodafone Idea Down With Biggest Quarterly Loss in Indian History, How Did It Come to Be

Published by
Arpit Sharma

Following the events of the past few weeks in the telecom industry, the situation of Bharti Airtel and Vodafone Idea has gone from bad to worse, because of the events that conspired, thus changing the definition of the Adjusted Gross Revenue (AGR) as newly defined by the Supreme Court of India. While Bharti Airtel has posted a loss of Rs 23,045 crore in the June-September quarter after provisioning for the new AGR based license fee and Spectrum Usage Charges (SUC) dues, Vodafone Idea is in the worst possible situation financially as the telecom operator has recorded losses worth Rs 50,921.9 crore which is the highest ever recorded loss in the Indian corporate history. As per an ET report on the matter, Vodafone Idea has set aside Rs 25,680 crore, and Bharti Airtel has set aside Rs 28,450 crore as per the statements issued by these companies on Thursday. An executive from one of the telecom operators has also remarked saying that the losses are actually “notional accounting losses” and not actually operational losses, meaning that if relief comes from the government, these figures might actually come down.



Bharti Airtel and Vodafone Idea Unsure About Payment of Dues

There is a term being thrown around by the telecom operators, and the companies are terming it as a matter of “going concern” meaning that the company has the ability to meet its financial obligations for the next 12 months. On this matter, the Sunil Bharti Mittal led telecom operator has said that it might not be able to raise additional funds to pay for the dues that have come up as the result of the new Supreme Court order on the matter of AGR. The company has also added that although the management could try to raise funds, but there could be no assurance about the extent to which the attempts to procure funds would be successful and whether or not it would happen in a timely manner.

Analysts Express Concern Over Investing Scenario

On the other hand, the analysts have also expressed concern over what signal the position of Vodafone Idea and Bharti Airtel would send to the global investors. Rohan Dhamija, telecom expert and partner at Analysys Mason, remarked, “When two companies — that were India’s top two telcos not too long ago are suddenly struggling to continue as going concerns, the signs are ominous, to say the least. The government must do something to provide relief to the sector in a balanced and fair manner, failing which global investor confidence in India’s telecom space is bound to suffer a serious setback.”

Government In Talks for Relief

The two telecom companies have to pay up to Rs 80,000 crore by the month of July, under three months as a result of the new Apex Court order. Bharti Airtel has provisioned for licence fee dues of Rs 16,815 crore and Rs 11,635 crore for SUC dues.

The telecom companies have also asked the government for some relief in the dues. The appeal for relief from the government includes a waiver of interest and penalties on the AGR related dues, lowering of taxes and levies and a moratorium on the expected payments. There are also talks about filing a plea seeking a limited review of the AGR verdict. As per the talks that are ongoing in the industry, the government might lower the license fees on AGR down to 5% from the existing limit of 8%, while giving a moratorium of two years for the spectrum-related dues.

Arpit Sharma

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

Published by
Arpit Sharma

Recent Posts

Oppo Reno7 Series First Batch Sold Out in 15 Minutes

The upcoming flagship from Oppo – Oppo Reno7 series was launched in China recently after…

Best Long Term Prepaid Plans from Airtel, Jio, Vi Today

After the tariff hikes, while the long-term plans are still available, they come for a…

Facebook Will Allow Users to Split Bills, Feature Already in Beta Testing

As the things are building up, Facebook might be bringing in a feature that will…

iPhone 12 Pro Available at an Amazing Price on Amazon

One of the most prominent players when it comes to online stores, Amazon has come…

Dish TV Android Box Features, Price Detailed

Dish TV, the second largest Direct-to-Home (DTH) service provider in India, offers an Android Box…

WhatsApp: How to Enable and Disable Disappearing Messages

If you didn’t already know, WhatsApp has brought in a feature using which the users…

MIUI 12.5 Enhanced Edition Now Available for Xiaomi 11 Lite 5G NE

In a recent development, Xiaomi 11 Lite 5G NE is apparently receiving its MIUI 12.5…

Why Do Telcos Want 5G Spectrum to Become More Affordable

After all that the government has done for the telcos in the recent months (announcement…

iPhone 14 Could Come With 3nm A16 Processor

Apple Inc’s chip supplier Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) has begun to test its…