AGR ruling drags Vodafone Idea loss to INR509bn

15 Nov 2019

Vodafone Idea, India’s second largest mobile provider by subscribers, has reported a net loss of INR509.2 billion (USD7.08 billion) for the three months ended 30 September 2019, attributing the bulk of the loss to the Supreme Court’s recent ruling on Adjusted Gross Revenue (AGR). Turnover for the period was down 3.8% quarter-on-quarter to INR108.4 billion, which the company attributed in part to severe floods in many of its major markets. Similarly, EBITDA dipped 8.3% to INR33.5 billion, although the impact of the decrease in revenue was partially offset by cost synergy realisation. In operational terms, the company counted a total of 311.1 million mobile subscribers – down from 320.0 million three months earlier – of which 90.3 million were 4G subscribers, compared to 84.8 million at end-June 2019.

As previously reported by TeleGeography’s CommsUpdate, the apex court’s 24 October ruling on AGR ended a decade-long dispute between the industry and the Department of Telecommunication (DoT). The ruling backed the DoT’s definition of AGR – on which mobile providers’ licence fees are based – which includes turnover from non-core sources, and gave the companies affected 90 days to pay the regulator the outstanding dues and report compliance.

In its report for the period, Vodafone Idea explains that it has accounted for an estimated liability of INR276.1 billion related to licence fees and INR165.4 billion related to Spectrum Usage Charges (SUC), plus interest and penalties totalling INR330.1 billion. The cellco noted that during the quarter it had recognised a charge of INR256.8 billion as part of an exceptional item ‘after adjusting the available provision and potential payments, on satisfaction of contractual conditions, under a mechanism with Vodafone Group.’ In addition, the cellco said it reassessed the recoverability of deferred tax assets, and derecognised deferred tax assets amounting to INR139.4 billion that it had recorded up to 30 June 2019. Vodafone Idea stressed that it is filing a review petition and is seeking relief for the sector through measures such as waiving certain aspects of the AGR liability demand and reducing licence fees and spectrum charges.