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(Updates to combine Vodafone, Bharti earnings, add detail)
By Sankalp Phartiyal
NEW DELHI, Nov 14 (Reuters) - Indian mobile carrier Vodafone
Idea on Thursday reported the biggest quarterly loss
in India's corporate history after making provisions for
outstanding government dues.
Vodafone Idea, made up of the local unit of Vodafone Group
Plc and billionaire Kumar Mangalam Birla's Idea
Cellular, reported a consolidated net loss of 509 billion rupees
($7.13 billion) in the second quarter to September.
The company took a charge of 256.78 billion rupees for the
quarter after India's Supreme Court last month upheld a demand
by the telecoms department that wireless carriers pay 920
billion rupees in overdue levies and interest.
Vodafone Idea and rival Bharti Airtel, two of
India's three main mobile carriers, will have to pay a bulk of
this state demand.
Bharti Airtel on Thursday reported a consolidated net loss
of 230.45 billion rupees ($3.23 billion) in three months to
September.
Bharti said it made a provision of 284.50 billion rupees,
more than 92% of the overall charge for exceptional items, after
the Supreme Court ruling.
Telecom providers in India pay the Department of
Telecommunications (DoT) nearly 3-5% of their adjusted gross
revenue (AGR) in usage charges for spectrum or airwaves and 8%
of AGR as licence fees.
The DoT and the mobile carriers have been at odds over the
definition of AGR. The companies argue that AGR should comprise
just revenue accrued from core services, while the DoT says AGR
should include all revenue.
The Supreme Court last month upheld the DoT's view on AGR.
Vodafone Idea said it was in active discussions with the
government seeking financial relief and also in the process of
filing a review petition with the Supreme Court.
"It is to be noted that our ability to continue as a going
concern is dependent on obtaining the reliefs from the
government... and positive outcome of the proposed legal
remedy," Vodafone Idea said in a statement.
The company's gross debt at end-Sept. stood at 1.17 trillion
rupees. Analysts have previously warned that Vodafone Idea will
be the worst hit after the Supreme Court ruling given its
already stretched balance sheet.
"Vodafone results are a reflection of the company’s
inability to compete effectively in a three player market," said
Deepa Dasani of HDFC Securities.
"Apart from its impact on its equity value, this result will
surely result in wider financial repercussions because it will
hit the lenders and debt investors in the company, including
mutual funds."
Analysts on average expected Vodafone Idea to report a
consolidated net loss of 44.22 billion rupees for the quarter,
according to Refinitiv data, although those figures did not
include the charge.
The wireless carrier had posted a net loss of 49.74 billion
rupees a year ago.
Vodafone Idea's consolidated revenue from operations for the
quarter rose 41.4% year-on-year to 108.44 billion rupees.
On Thursday, Vodafone Idea said it plans to sell its 11.15%
stake in mobile mast operator Indus Towers once its merger with
Bharti Infratel receives regulatory clearances.
Bharti Airtel's MD and CEO, India & South Asia, Gopal Vittal
said: "We continue to engage with the government and are
evaluating various options available to us."
"We are hopeful that the government will take a considerate
view in this matter given the fragile state of the industry,"
Gobal said.
Analysts on average expected Bharti Airtel to report a loss
of 11.16 billion rupees for the three months to the end of
September, according to Refinitiv data.
Bharti, which runs operations in South Asia and Africa, said
its Indian revenue rose 3% year-on-year to 153.61 billion
rupees.
Earlier on Thursday, Singapore-based Singtel posted a
second-quarter loss of S$668 million ($491.29 million) hurt by a
one-time charge recorded by Bharti.
Singtel is the biggest shareholder in Bharti Airtel, with an
effective stake of about 35%.
($1 = 71.3500 Indian rupees)
(Reporting by Sankalp Phartiyal
Adiitional reporting by Nivedita Bhattacharjee in BENGALURU.
Editing by Jane Merriman)
