The future of Sunil Bharti Mittal’s and Kumar Mangalam Birla’s telecom empire is looking bleak with Bharti Airtel and Vodafone Idea reporting second-quarter losses that together amount to over ₹73,000 crore.

While Airtel reported its highest-ever loss of ₹23,045 crore compared to a net profit of ₹119 crore in the corresponding period last year, Vodafone Idea recorded a loss of ₹50,921 crore, the highest-ever loss for a corporate in India.

Tata Motors held that record after posting a loss of ₹26,961 crore for the third quarter of 2018.

Both operators have made provisions to pay Adjusted Gross Revenue dues to the Centre following an adverse ruling by the Supreme Court.

Provisions for AGR

Airtel has provided for an additional charge aggregating to ₹28,450 crore. Vodafone Idea has provisioned ₹25,677.9 crore for AGR payments.

The loss for Vodafone Idea would have been higher had it provisioned for the total estimated payout of about ₹44,150 crore.

Both operators said that they were hoping to get relief on AGR payments from the government. “We are in active discussions with the government seeking financial relief following the recent Supreme Court ruling,” said Ravinder Takkar, Managing Director and Chief Executive Officer, Vodafone Idea.

This comes even as the Department of Telecom issued notices to all operators to deposit the licence fee dues per the SC ruling. The total dues for the entire industry are estimated to be over ₹2 lakh crore.

Crisis time

Analysts tracking the telecom sector said that if the government insists on collecting the dues without giving any relief, then a number of companies will have no option but to shut their operations. “Other than Reliance Jio, all the other operators will find it difficult to sustain operations with this kind of payout. Telecom, once the poster boy of reforms, is set for a huge crash if the government does not step in,” said an analyst.

But for the AGR provisioning, both Airtel and Vodafone Idea look to be stable in terms of their key operational metrics.

 

“Despite being a seasonally weak quarter, we witnessed positive revenue growth in the second quarter.

“We continue to witness strong data traffic growth of around 81 per cent YoY and added around 8 million 4G customers on our network during the quarter,” said Gopal Vittal, Airtel’s Managing Director and Chief Executive Officer, India & South Asia.

Mobile data traffic for Airtel nearly doubled to 4,497 petabytes (PBs) in the quarter, as compared to 2,478 PBs in the corresponding quarter last year.

Mobile 4G data customers increased by 57 per cent to 103.1 million from 65.7 million. The average revenue per user (ARPU) increased to ₹128 as against ₹100.

For Vodafone Idea, the total income on a consolidated basis rose to ₹11,146.4 crore in the second quarter compared to ₹7,878.6 crore recorded during the same quarter last year.

The operator also revised its capex guidance for FY20 to ₹13,000 crore from ₹17,000 crore.

Though its subscriber base declined to 311.1 million from 320 million, total data volumes grew by 8.4 per cent to 3,492 billion MB compared to the last quarter.

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