Vodafone’s loss-making and indebted joint venture with local firm Idea was the biggest loser.
Telecom giants Vodafone Idea and Airtel on Thursday reported a huge drop in earnings as the companies made provisions for potential outstanding payments to the government. Vodafone Idea said its consolidated net loss in the second quarter widened to Rs 50,922 crore – it’s biggest ever, while Airtel reported a net loss of Rs 23,044.9 crore.
Vodafone Idea took a charge of Rs 25,677.9 crore for the quarter to the end of September after the Supreme Court upheld a demand by the telecoms department that wireless carriers pay Rs 92,000 crore in overdue levies and interest last month. For Airtel, India’s second largest wireless telecom services provider, the provision was Rs 34,260 crore.
Vodafone Idea, a combination of the local unit of British Vodafone Group Plc and billionaire Kumar Mangalam Birla’s Idea Cellular, also said it was in the process of filing a review petition with the Supreme Court.
The wireless carrier had posted a net loss of Rs 4,974 crore a year ago. The company’s consolidated revenue from operations for the quarter rose 41.4 per cent year-on-year to Rs 10,844 crore.
In a regulatory filing, Bharti Airtel said its revenue from operations came in at Rs 21,131.3 crore in the second quarter of current financial year, up 5 per cent compared with the year-ago period.
Airtel had reported a net profit Rs 118.8 crore for the corresponding period a year ago. Shares in Bharti Airtel dropped nearly 5 per cent during the session, ahead of the earnings announcement by the private sector telecom company.
“The Hon’ble Supreme Court has allowed a period of three months to the affected parties to pay the amounts due to DoT (Department of Telecommunications). This Court Judgement has significant financial implications on the Group,” Bharti Airtel said.
Last month, telecom companies in India were dealt a blow after being told to pay a whopping Rs 92,000 crore bill by the Supreme Court after a two-decade legal wrangle over past spectrum and licensing fees.
Vodafone’s loss-making and indebted joint venture with local firm Idea was the biggest loser, Bloomberg News reported. Both Vodafone Idea and Bharti Airtel expressed their “extreme disappointment” in the decision, saying it will exacerbate the sector’s financial woes.
However, Reliance Jio, the mobile operator backed by Asia’s richest tycoon Mukesh Ambani and which turned the sector on its head in 2016 with free calls and ultra-cheap data, escaped with a relatively light Rs 13,000 crore tab.
The row centred on how licence and other fees paid by the firms should be calculated. The companies had argued they should be based on income from only their telecoms business, but the court said they must be based on the amount earned from all business dealings such as from handset sales and other income.
(With inputs from agencies)
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