- Telecom company Vodafone Idea has the biggest loss in corporate history
- The company incurred a loss of Rs 74,000 crore in the second quarter of the current financial year.
- At the same time, the second telecom company Airtel lost Rs 23,045 crore in the second quarter.
- After registering the liability on the AGR in the ledger, both companies expressed fear of not continuing the business
Vodafone Idea, already struggling with difficulties, has received another setback. The company incurred a loss of Rs 50921.9 crore in the July-September quarter. At the same time, Bharti Airtel reported a loss of Rs 23,045 crore for the same quarter.
A company like Vodafone Idea, Airtel lose Rs 74,000 crore in the second quarter
Doubts have arisen over the ability of these companies to continue with such huge losses. The two companies provided provisioning to settle the arrears under the Adjusted Gross Revenue (AGR) that emerged after the recent ruling of the Supreme Court, which increased the losses.
The biggest loss in corporate history
The loss of Vodafone Idea was the largest in the corporate history of India. It gave Rs 25,680 crore, while Bharti Airtel gave an additional provisioning license of Rs 34360 crore for fee, spectrum usage charge (SUC), penalty and interest. Airtel’s losses were the third major loss in India Inc.
The company’s ability to run depends on the government
Vodafone Idea said, ‘Our ability to continue business depends on the relief from the government and the positive outcome of the proposed legal relief. Till the result of these cases, these financial results have been prepared on the going concern basis.
Airtel and unable to raise money
At the same time, Airtel warned that due to the Supreme Court Judgment on AGR, it may not be able to raise more money to repay the arrears. This is when the Bharti Group has an established record of raising money through various sources of finance in various markets and currencies. The court upheld the DoT’s plea to include income derived from non-core activities of companies within the ambit of AGR.
Airtel said, “It cannot be assured whether the management’s plan to raise the required amount of money on time and on terms acceptable to the group will succeed”. The company said, ‘This is creating a situation of uncertainty. It may not be able to discharge its obligations under normal business procedures. This may raise doubts over the group’s ability to continue the business.
1.33 lakh crore liability on 15 telecom companies
After the court’s judgment, 15 telecom companies have incurred the additional statutory liability of Rs 1.33 lakh crore. The biggest among them is Voda-Idea and Bharti Airtel. The total liability of Rs 80,000 crore has been incurred on these. They have to pay this amount in three months. License fees and SUC are to be paid based on the percentage of AGR.
27,610 crore loss on Vodafone Idea
Vodafone Idea has estimated its outstanding on license fees to be 27,610 crores as of 30 September 2019, while it has to pay Rs 16,540 crore towards SUC. Airtel has provisioned for license fee dues of Rs 16815 crore. In addition, Rs 11,635 crore has been provisioned for SUC arrears.