Mumbai: Vodafone Idea on Friday hit the lower circuit, after falling more than 10% on the BSE after it announced a net loss of Rs 50,922 crore for the September quarter, the highest ever net loss by a company in India's corporate history.
Bharti Airtel drops 2 % after it logged its worst quarter ever, in terms of net loss in a quarter.
Both Vodafone Idea and Airtel took a hit on its balance sheet and the bourses after the Supreme Court ruling on the adjusted gross revenue (ADR). The the apex court upheld the government’s broader definition of revenue, on which it calculates levies on telecom operators, dealing a ₹92,000 crore blow to the telecom industry, which is already burdened with falling tariffs and mounting debt.
Vodafone Idea said in a regulatory filing that the Supreme Court order on AGR has resulted in liabilities on accounts of licence fee and spectrum charges to the tune of ₹ 44,150 crore which has to be paid within 3 months. Airtel also said the court judgment has significant financial implications on the company.
Emkay Global, in a note, stated that the AGR penalty will undoubtedly impact the Bharti Airtel's balance sheet and borrowing costs. "Further, given the quantum of the penalty, we believe that Bharti will have to raise capital to keep leverage under check.
"Nevertheless, the weakening financial viability of Vodafone Idea Aeven if the companies get a relief from the government on payment timeline and some potential license fee reduction in the future. We have assumed that Bharti will gain 40 per cent of VIL's revenues or subscribers, while JIO might garner a higher share of 60 per cent," Emkay said.