Bharti Airtel posts staggering Rs 23,045 Cr net loss in Q2 after AGR provisioning

Telecom operator Bharti Airtel on Thursday posted a staggering Rs 23,045 crore net loss for the second quarter ended September 30, due to provisioning of Rs 28,450 crore in the aftermath of the Supreme Court ruling on statutory dues. The Sunil Mittal-led company said the apex court judgement which had upheld government's way of calculating revenue of telcos (on which statutory liabilities like licence fee and spectrum usage charges are computed) has "significant financial implication for the company".

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Bharti Airtel reports major loss and penalties

Last month, Bharti Airtel had postponed the release of its full Q2 earnings to November citing the uncertainty in the sector in the wake of the court ruling on definition of telecom revenues. Airtel's colossal net loss for just-ended September quarter was on account of exceptional charge pertaining to provisioning of Rs 28,450 crore towards the AGR dues, that included the principle of Rs 6,164 crore, interest of Rs 12,219 crore, penalty of Rs 3,760 crore, and interest on penalty of Rs 6,307 crore. Announcing its Q2 earnings scorecard, Airtel said its consolidated net loss before exceptional items (the one time charge) for the quarter was Rs 1,123 crore, and that the net Loss (after exceptional items) was Rs 23,045 crore. The company had recorded net profit of Rs 119 crore in the same quarter previous year, although it said that year-on-year numbers were not comparable due to adoption of a new accounting standard.

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"The liabilities/provisions as at September 30, 2019, aggregate Rs 34,260 crore (comprising of principal of Rs 8,747 crore, interest of Rs 15,446 crore, penalty of Rs 3,760 crore and interest on penalty of Rs 6,307 crore)," Airtel said in a statement.

Airtel CEO, India and South Asia, Gopal Vittal hoped that the government would take a considerate view on the adjusted gross revenue (AGR) matter given the "fragile state of the industry".

"On the AGR verdict of the Supreme Court, we continue to engage with the government and are evaluating various options available to us," he said.

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The consolidated revenue of Bharti Airtel was up by 4.7 per cent at Rs 21,199 crore in the just-ended quarter. India revenues were up 3 per cent year-on-year (5.7 per cent on an underlying basis), while Africa revenues rose 12.6 per cent over the same period previous year.

"India revenues for Q2 at Rs 15,361 crore have increased by 5.7 per cent year on year (reported increase of 3 per cent) on an underlying basis. Mobile revenues have witnessed a year-on-year growth of 7.1," it added.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) came in at Rs 8,936 crore in the Q2 FY2020 against Rs 6,343 crore in the year-ago period. The Supreme Court, last month, had upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer. Old telecom operators Bharti Airtel and Vodafone Idea were supposed to take the maximum hit on the payment of statutory dues to the government. As per latest estimates by the telecom department, Bharti Airtel faces a liability of around Rs 62,187 crore (including share of Tata Group of companies and Telenor India), while Vodafone Idea may have to pay about Rs 54,184 crore. The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.

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Supreme Court allows telecoms to pay dues 

The Supreme Court has allowed three months to the affected telcos to pay amounts due to the DoT, and on Wednesday the government shot off notice to telecom operators to pay their revenue share dues within the timelines stipulated by the court. The department has given option to telecom operators to clear all the dues on a self-assessment basis. Airtel's net debt narrowed year on year basis to Rs 1,18,106.5 crore.

"Despite being a seasonally weak quarter, we witnessed positive revenue growth in Q2 on the back of various initiatives aimed at providing superior differential services through our 'Thanks' platform. We continue to witness strong data traffic growth of about 81 per cent year-on-year and added about 8 million 4G customers on our network during the quarter," Vittal said.

Bharti Airtel shares closed at Rs 362.65 apiece, down by 1.59 per cent compared to the previous close on the BSE. The results were announced after market hours.

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