Airtel losses widen on AGR case, as revenue, EBITDA recovers

30 Jul 2020

Indian telecoms group Bharti Airtel has reported a 15% year-on-year increase in total revenue for its first quarter (ended 30 June 2020), alongside annual EBITDA growth of 25% but the impact of regulatory disputes in its domestic market resulted in net losses for the period widening to INR159.3 billion (USD2.13 billion), compared to INR28.7 billion a year ago and INR52.4 billion in the previous quarter. Turnover for the period was INR239.4 billion, up from INR237.2 billion in the previous quarter and INR207.4 billion in Airtel’s Q1 2020 report, whilst EBITDA reached INR106.4 billion from INR103.3 billion quarter-on-quarter and INR84.9 billion y-o-y. Exceptional item costs (net of tax and non-controlling interests) totalled INR155.0 billion, including a further INR107.4 billion related to the ongoing dispute over Adjusted Gross Revenue (AGR) in India.

A Supreme Court decision in October 2019 expanded the definition of AGR – the figure used to calculate operators licence and spectrum fees – to include earnings from non-core services and approved the Department of Telecommunications (DoT) to issue demands for unpaid fees, plus interest and penalty charges dating back more than a decade. Due to a lack of clarity in the apex court’s decision, compounded by reported errors in the DoT’s calculations, the amount owed by the nation’s operators remains unclear. Based on its own self-assessment, Airtel had submitted a total of INR180 billion in early March 2020, including the INR130 billion it believed it owed plus INR50 billion to reconcile differences between its calculations and a reassessment of its dues by the DoT. Such recalculations were ruled out by the Supreme Court, however, which ordered companies to pay dues based on the DoT’s earlier estimates, or approximately INR439.8 billion for Airtel.

In terms of its operations, meanwhile, Airtel counted a total of 419.996 million customers across its businesses in India, South Asia and Africa (via majority-owned Airtel Africa), up 1.4% y-o-y but down from 309.754 million at end-March 2020. In its domestic market the operator recorded a total of 279.869 million mobile subscribers – down 1.3% q-o-q, but up 1.1% y-o-y – 138.294 million of which were 4G customers (136.309 million at end-March 2020). Tariff increases in late 2019 combined with a greater focus on ‘quality’ customers saw ARPU rise to INR157 from INR129 a year earlier.