AGR impact: Voda Idea posts biggest quarterly loss in India Inc history

AGR liability leads to pre-tax loss of Rs 36,959 crore

Vodafone Idea reported a massive pre-tax loss of Rs 36,959 crore for the July-September quarter after it provided for payments related to adjusted gross revenues, or AGR. The company took a hit of Rs 30,774 crore (including AGR) for the quarter. This led to a  loss of Rs 50,922 crore at the net level, the highest-ever for an Indian company. The company had posted a loss of Rs 4,974 crore in the year-ago quarter while the loss in the June quarter was Rs 4,874 crore. 

Giving a break-up of the liabilities on account of AGR, the company provisioned for Rs 27,610 crore on account of licence fees and Rs 16,540 crore, including interest and penalties on interest, related to spectrum usage charges (SUC) up to September 30, 2019.

Liabilities on account of AGR are Rs 25,678 crore. The estimate is based on demands received from Department of Telecommunications (DoT) and additional estimates.

While the company has provided for SUC, considering that no spectrum is used for generating non-telecom income, it is evaluating the levy of SUC on such income. The company is in the process of filing a petition to review the Supreme Court judgment of AGR.

Revenue from operations stood at Rs 10,844 crore, down 3.8 per cent down from the last quarter. This was marginally lower than the Bloomberg consensus estimates of Rs 10,925 crore. The results were impacted by seasonality and severe floods in many of its key markets. On a year-on-year basis, revenue recovered by 41.5 per cent. 

Earnings before interest, tax, depreciation, and amortisation (Ebitda) for the quarter decreased to Rs 3,347 crore, a sequential decline of 8.3 per cent because lower revenue was partially offset by continued cost synergy realisation. The subscriber base slipped by another 9 million during the quarter to 311.1 million with average revenue per user (ARPU) at Rs 107 compared to Rs 108 in Q1.

“The subscriber churn continues to improve, reaching 3.5 per cent in Q2FY20 compared to 3.7 per cent in Q1FY20 and 7.2 per cent in Q4FY19. During the quarter, gross subscriber additions have also increased during the quarter,” said the company.

The company’s gross debt for the quarter was Rs 1.173 trillion, including deferred spectrum payment obligations of Rs 89,170 crore, excluding lease liabilities. Cash and cash equivalents were Rs 15,390 crore and net debt Rs 1.019 trillion.

The firm sounded cautious on its ability to run operations, given the large liabilities on account of the adverse AGR ruling.