AGR case: SC orders telcos to file balance sheets of past 10 years

In its affidavit, Bharti Airtel on Thursday told the court it had paid a substantial part of its AGR dues, seeking 20 years to pay the rest.

The Supreme Court has opened a new front, asking Bharti Airtel and Vodafone Idea to submit their financial statements for the past 10 years in the long-winded adjusted gross revenue (AGR) case as the two telcos listed reasons for not furnishing bank guarantees and sought a 20-year term to pay their dues. The top court will next hear the case in the third week of July.

In its affidavit, Bharti Airtel on Thursday told the court it had paid a substantial part of its AGR dues, seeking 20 years to pay the rest. Explaining why furnishing a fresh bank guarantee was not necessary, the Sunil Mittal-led telco told the court Airtel was no fly-by-night operator. Financially stressed Vodafone Idea’s counsel said if it was forced to give a bank guarantee, the company would go down, hitting hundreds of jobs. The Department of Telecommunications (DoT) has sought time from the court to assess the affidavits of the telcos.

Responding to the court’s recent observation that there was no merit in the government asking public sector units to pay Rs 4-trillion AGR dues, The DoT has withdrawn the bulk of its demand. The DoT told the SC on Thursday that it had decided to withdraw 96 per cent of the Rs 4-trillion demand against non-telecom PSUs such as GAIL and Power Grid Corp. In effect, AGR dues worth Rs 3.7 billion have been taken off.

Solicitor General Tushar Mehta, representing the DoT, informed a three-judge bench headed by Justice Arun Mishra that the demand against non-telecom PSUs had been withdrawn.

Google's interest positive but may not help solve Voda Idea's debt woes

Acquisition of a controlling stake by an outsider or a sizable equity infusion by current promoters remains the need of the hour, Credit Suisse said in its latest note.

A potential investment by Google into cash-strapped Vodafone Idea (VIL), if materialises, will be a strategic positive for the Indian telecom operator, but a five per cent stake would still be inadequate to solve the telcos' debt problems, analysts said on Friday.

Acquisition of a controlling stake by an outsider or a sizable equity infusion by current promoters remains the need of the hour, Credit Suisse said in its latest note.

Alphabet Inc's Google is said to be eyeing about 5 per cent stake in VIL, the Financial Times had reported on Thursday. Such an investment in VIL will pit the search giant against Facebook which has picked up a stake in Jio Platforms, the firm that houses India's youngest but biggest telecom company - Reliance Jio.

Google investment into VIL can be incrementally positive, but a 5 per cent stake is unlikely to move the needle or provide any meaningful relief to VIL's debt problems, said Credit Suisse.

"We think unless Google (or any other external investor) looks at acquiring a controlling stake in VIL, the chances of company's long term survival beyond FY23 (when the moratorium on deferred spectrum debt ends) appears to be low," it said.

Goldman Sachs said that at Vodafone Idea's current market cap, a 5 per cent stake would be valued at USD 100 million or less than one per cent of the company's USD 14 billion-outstanding net debt as of December 2019.

DCC may discuss telcos' AGR issue on Friday; COAI presses for relief

The industry has made a string of demands including a moratorium, staggered mode of payment, lower licence fee and setting up of a tariff floor.

The Digital Communications Commission, the apex decision-making body in the telecom sector, is expected to meet on Friday to deliberate on a relief package for the financially stressed industry.

As directed by the Supreme Court, telecom companies need to pay Rs 1.47 trillion to the government towards licence fee and spectrum charge dues linked to adjusted gross revenue (AGR).

Of this, Bharti Airtel needs to pay Rs 35,500 crore and Vodafone Idea more than Rs 50,000 crore—they have paid just a fraction of the total till now.

The industry has made a string of demands including a moratorium, staggered mode of payment, lower licence fee and setting up of a tariff floor.

Sources said that any relief for the sector would come with riders.

“They (companies) cannot manipulate us, they have to make further payments before even seeking relief,” a Department of Telecommunications (DoT) official said.

The DCC, formerly known as the Telecom Commission, comprises officials from the departments of telecommunications, electronics and information technology, revenue, and think tank NITI Aayog.

The DoT is expected to make a presentation to the commission regarding the possible relief scenarios.

Cellular Operators’ Association of India, a body representing the telecom industry, on Thursday urged the Union government to step in so that the telecom sector can be brought back on track.

COAI, in a letter to Telecom Secretary Anshu Prakash, asked for easier terms for payment of statutory dues by telcos, including extension of loans at lower interest rates to cover the AGR liabilities, as also fast implementation of floor prices, to rescue the troubled sector.

AGR issue: Top FinMin, NITI, DoT officials talk relief measures for telcos

The telecom department officials remained tightlipped after the high-level meeting on Sunday.

An inter-ministerial group comprising officials from the finance ministry, NITI Aayog, and Department of Telecommunications on Sunday discussed urgent relief measures that could be extended to the telecom industry on adjusted gross revenue (AGR) issue.

The telecom department officials remained tightlipped after the high-level meeting on Sunday. The meeting comes at a time when the companies stare at Rs 1.47 trillion in unpaid dues — Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea owe about 60 per cent. Airtel has raised $3 billion in the past few months and is expected to have sufficient funds to tide over the AGR crisis. Vodafone Idea, which has paid just 7 per cent of its total Rs 53,000-crore statutory dues, remains vulnerable.

Bharti Airtel Chairman Sunil Mittal had last week appealed to the government for cut in levies and taxes, in order to pull the sector out of what he had described was an “unprecedented crisis”.

The government, meanwhile, is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest.

Both Mittal and Vodafone Idea Chairman Kumar Mangalam Birla continued to meet top government functionaries throughout the last week to seek prompt measures that would offer a breather to the sector.

A top government official had recently said attempts were being made to balance the need for health of the sector, consumer interest while complying with the Supreme Court order on statutory dues.

Although the official had not elaborated, sector watchers had said the statement alluded to the government keen on ensuring adequate competition by retaining the present three-plus-one model of competition (three private players and one public sector company). The statutory dues arose after Supreme Court, in October last year, upheld the government’s position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

Vodafone Idea default can raise India's fiscal deficit by 40 bps

The social impact of this could be worse as 300 million subscribers may face the annoyance of network shutdown and churn.

A possible default by Vodafone Idea (Voda-Idea) in paying its adjusted gross revenue (AGR) dues and the company shutting down operations will have serious repercussion on the telecom and banking sectors in particular and the economy in general with large magnitude of debt default, job losses and customer annoyance as the telco faces an imminent risk of shutdown.

A default by Voda-Idea and the company shutting shop, analysts say, could increase India’s fiscal deficit by 40 basis points (bps). While presenting the Union Budget for financial year 2020-21 (FY21), the government had pegged the fiscal deficit for FY21 at 3.8 per cent of GDP (gross domestic product) and at 3.5 per cent for FY20.

“Voda-Idea has gross debt of Rs 1.2 trillion, of which around Rs 900 billion is government’s deferred spectrum debt, while around Rs 250 billion is bank debt. A default of such a large scale could increase India’s fiscal deficit by nearly 40 bps, thus having the deepest impact on government receipts despite winning the suit, while creating ripples in the banking sector,” wrote Gautam Duggad, head of research for institutional equities at Motilal Oswal Financial Services (MOFSL) in a recent note.

The social impact of this could be worse as 300 million subscribers may face the annoyance of network shutdown and churn. Reports peg the job loss at Voda-Idea at a staggering 13,500 employees. This is merely the direct impact, while the indirect impact on multiple vendors and other stakeholders could be even worse.

“Ironically, the government, despite winning the suit, could see the biggest impact through deferred spectrum debt default Rs 900 billion. Even with some relief of AGR liability, Voda-Idea would have found it difficult to service debt and capex needs through its operating cash flow,” Duggad says.

The decision to expedite the payment by last week took the companies and the Street by surprise. Most analysts had expected the government to relax the payment timeline and give companies room to secure funding.

AGR verdict: Data could be the new Onion, Mr Ravi Shankar Prasad

The need of the hour could be to let Vodafone-Idea continue with the business providing them an extended rope to make the payments over a period of time, than to kill the "goose".

The Hon. Supreme Court on Friday rapped the telecom operators and ordered them to pay the adjusted gross revenue (AGR) dues by the stroke of midnight on Friday. This is akin to a “Death Warrant” for Vodafone-Idea. The legal system has to follow the rule book and is bound by law. However, it’s the executive which has to “think on its feet” and figure out the best solution for this situation from a holistic viewpoint, vis-à-vis nailing a “culprit”.

All eyes would be on the Telecom Minister, Mr. Ravi Shankar Prasad, who will need to think “out-of-the-box” than take the easy path of toeing the Hon. Court’s directive. Before shutting Vodafone-Idea, the Telecom Minister should figure out how to recover AGR dues from the corpses of telecom sector, viz. Reliance Communication (RCom), Aircel, Telenor, Sistema and Videocon. Not everybody comes with a rich pedigree like the Tatas, who are paying-off dues of Tata Teleservices through the parent Tata Sons.

Now, here is what would happen if Vodafone-Idea were to shut shop:

- Non-recovery of dues: It will defeat the very purpose of AGR, turning this imbroglio into a long-drawn process without any clarity on closure.

-Job losses: About 14,000 employees, along with numerous others who are directly dependent on Vodafone-Idea as casual workers, dealers, service providers etc. will suffer.

- Non-performing assets (NPAs): Nearly Rs 1.15 trillion could turn NPA. This could be another IL&FS-type event. Unlike other NPAs, the so called “assets” of a telecom company can disappear in thin air the day it shuts down. Additionally, who would shoulder the responsibility paying-off home loans, personal loans etc of the employees?

- Telecom tariffs: Most telecom players have already increased tariffs by about 40 per cent recently and should double to about Rs 300, as per CEO of Airtel, Gopal Vittal, for the sector to remain sustainable. However, in the event of demise of Vodafone-Idea, the tariffs can shoot up further within a short span.

- Porting: Some 30 crore Vodafone-Idea customers will need to the ported out of the network, leading to possible disruption of services and inconvenience. Porting customers are normally given a red carpet welcome, but the Vodafone-Idea customers may be treated as refugees.

AGR dues: Telecom firms, DoT discuss part upfront payment by March 31

The move suggested by telcos, if executed, will bring in additional revenues of Rs 22,077 crore from Bharti Airtel, Vodafone Idea, and the Tatas in this fiscal year.

BS : Leading telcos are discussing a proposal with the Department of Telecommunications (DoT) regarding paying part of their AGR dues upfront by March 31 if the Supreme Court gives a favourable verdict on their “modification petition”, which will be heard this week.

The companies have offered to pay upfront the principal amount due for licence fees and spectrum usage charges (SUCs) on the basis of adjusted gross revenue (AGR). This amount will not include the interest, the penalty, and the interest on the penalty. The proposed upfront amount will be the difference between the AGR calculations done by the DoT and what the telcos have paid as licence fees and SUCs over the years based on their interpretation of AGR. The Supreme Court had in October upheld the DoT definition of AGR, which resulted in a Rs 1.47 trillion additional payout bill for the telcos.

The move suggested by telcos, if executed, will bring in additional revenues of Rs 22,077 crore from Bharti Airtel, Vodafone Idea, and the Tatas in this fiscal year.

This is in addition to the budgeted target of Rs 50,519 crore as telecom revenues in 2019-20.

If all other telcos (including those that have stopped operations) were to make the upfront payment, the government will get around Rs 34,773 crore (excluding those of Reliance Jio, which has paid Rs 195 crore). These include Rs 23,182 crore as licence fees and Rs 11,591 crore as SUC. The three telcos, through the new petition, have requested the court to give them permission to discuss with the DoT the terms and timing of the payment of the remaining dues. The upfront amount represents around 25 per cent of their dues and is in many ways in line with what the telcos paid as deferred spectrum. In deferred spectrum, the upfront payment varied from 25 per cent to 30 per cent, depending on the band in which they bought spectrum, with the rest payable in 16 years with a two-year moratorium.

If the same formula is implemented (where a two-year moratorium is given just after the upfront payment), telcos will not have to pay both for deferred spectrum (the government has allowed a moratorium recently), totalling more than Rs 50,000 crore for the next two years, and will have no payout on AGR either. This will give a cushion for many players like Vodafone Idea to tide over their financial problems.

AGR dues: DoT talks tough on deadline, telecom companies sit on the fence

Telcos discuss giving January 24 deadline a miss.

BS : The Department of Telecommunications (DoT) will begin issuing notices to telecom companies after the January 24 deadline for payment of AGR (adjusted gross revenue) dues, set by the Supreme Court, lapses, a senior official said.

This comes even as the apex court on Tuesday agreed to list the “modification petition” filed by Bharti Airtel, Vodafone Idea and Tata Group for “sometime next week”. The firms have sought a change to the 90-day deadline for payment of Rs 1.47 trillion worth of AGR dues, and permission to engage with the DoT on the terms and timing of payment.

It is learnt that the DoT will issue notices in compliance with the apex court’s October 24, 2019, order that stated that the AGR-related dues need to be paid by January 24.

“We cannot go against the SC. Therefore, we have to recover dues from the companies according to their order,” an official said. He added that if the companies get any relief from SC next week, their payments will be adjusted for any future settlement.

Meanwhile, leading telecom companies are holding hectic parleys as they consider skipping the deadline for payment of AGR dues.

Rajan S Mathew, director general of Cellular Operators Association of India (COAI), said: “I understand that most of the telcos may wait till the hearing of the new petition before they make the payment.”

Mathew said there were enough judicial precedents, where the court had not executed its order, pending further adjudication in the same court. He said that they will continue to hold talks with DoT and are hopeful that no coercive action will be taken, though there has been no official communication to that effect.

This view was echoed by the lawyer Shally Bhasin, who represented Vodafone Idea. Bhasin told TV channels that no one was going to pay the AGR dues and that telcos have requested the court to let them discuss the matter with DoT and finalise the payment plan.

However, Bharti Airtel declined to comment on the issue, and it is not clear whether it will pay some money upfront or follow the same line as Vodafone Idea.

In the case of Jio, which was not part of the review petitions, it is expected to pay by the deadline. Jio declared in its recent financial results that it has estimated the liability for the period from 2010-11 to 2018-19 at Rs 177 crore for licence fee and spectrum user charges (SUC), in view of the SC judgment.

Jeff Bezos bets on 'Indian century', gives MSMEs $1-billion push

Commits to exporting $10 billion India-made goods by 2025.

Amazon.com Inc Founder and Chief Executive Officer Jeff Bezos said on Wednesday that his company would invest an additional $1 billion (about Rs 7,000 crore) to help bring small businesses online in India, and also committed to using the retail giant’s “size, scope and scale” to export $10 billion of made-in-India goods by 2025.

Bezos’ India visit — for the maiden edition of his firm’s micro, small and medium enterprises (MSME)-focussed event, Amazon Smbhav — comes at a time when the Competition Commission of India (CCI) is probing his company, as well as Walmart-owned Flipkart, on complaints of deep discounting practices and tie-ups with preferred sellers.

Seeking to reach out to critics, Bezos, donning traditional Indian attire, said his company was committed to being a long-term partner of India.

“Actions speak louder than words,” he added, addressing a packed house in New Delhi.

“We’re making this announcement now because it’s working...When something works, you should double down on it.

I want to make a prediction for you. I predict that the 21st century is going to be the Indian century. The dynamism, the energy… everywhere I go here, I meet people who are working in self-improvement and growth. This country has something special, democracy,” he said.

“I make one more prediction for you: In this 21st century, the most important alliance is going to be the alliance between India and the US,” Jeff Bezos added. The firm aims to digitise 10 million MSMEs with the proposed investment. In addition to providing training and enrolling MSMEs into its programmes, Amazon will help them work on cloud technology through specialised Amazon Web Services offerings at low costs. It will also establish 100 “digital haats’ in cities and villages throughout India.

Huawei likely to conduct trial runs of 5G waves for Airtel, Vodafone

Sources said both Airtel and Vodafone have also joined ZTE, Nokia and Ericsson, apart from Huawei, for conducting the 5G trials.

Company News : Chinese telecommunications equipment maker Huawei is expected to conduct 5G trials for Bharti Airtel and Vodafone Idea, sources said, as the central government finalises the trial runs before the spectrum auctions.

Sources said both Airtel and Vodafone have also joined ZTE, Nokia and Ericsson, apart from Huawei, for conducting the 5G trials. Reliance Jio will rope in South Korean equipment maker Samsung.

State-owned BSNL is also likely to go with ZTE. The firms have submitted applications for 5G trials, industry sources said.

The Chinese firm had had come under a cloud after there were allegations that its electronic and telecom devices helped China to spy on US corporations and agencies. The firm has been barred in Australia and Japan, but welcomed in Russia, Turkey and Saudi Arabia.

The central government had even constituted a committee headed by its principal scientific advisor to decide on Huawei’s participation in the 5G trials. The trials would establish use cases in the country as a precursor to the full-fledged launch of 5G services.

However, last month, Telecom Minister Ravi Shankar Prasad had said the government will allocate airwaves to all telecom service providers for conducting trials of super-fast 5G network, and will not bar any equipment suppliers in the trials. The stance had spelt relief for Chinese telecom gear maker Huawei, which rivals western equipment makers such as Ericsson and is facing curbs in the US.

Huawei India CEO Jay Chen had earlier stated the company firmly believes that only technology innovations and high-quality networks will be the key to rejuvenating the Indian telecom industry.

“We have our full confidence in the [Prime Minister Narendra] Modi government to drive 5G in India. We have our full confidence in Indian government and industry to partner with best technology for India’s own long-term benefit and also for cross-industry development,” Chen had recently said.

DCC may discuss proposal to conduct spectrum auction in December meeting

Bharti Airtel, Vodafone Idea, and Jio had urged the government to reduce the price, following which the matter went to the regulator for a review.

Telecom Secretary Anshu Prakash on Monday said the proposal to conduct spectrum auctions in this financial year could be discussed in the Digital Communications Commission (DCC) meeting scheduled next month. He, however, did not specify the date for the meeting. DCC is the apex decision-making panel of the government on telecom. The telecom panel is expected to approve the suggestions made by the Telecom Regulatory Authority of India (Trai) on the quantum and price of 5G spectrum and the airwaves in the premium 700 MHz band.

The regulator said its August 2018 recommendations on spectrum valuation and reserve prices never mentioned anything on financial health and capability of the companies to bid, and what is being attributed to it now is a concern expressed by a section of stakeholders as part of the consultation process.

Bharti Airtel, Vodafone Idea, and Jio had urged the government to reduce the price, following which the matter went to the regulator for a review.

Trai, in July 2019, stuck to its original recommendation that radiowaves used for telecom services on 5G and other bands should be auctioned at a start price of over Rs 5.7 trillion.

The last spectrum auction in October 2016 saw only 40 per cent of the spectrum offered being sold. In that auction, the government had garnered Rs 65,789 crore from the sale of just 965 MHz. The entire 2,354.44 MHz that was on offer at the base price of Rs 5.63 trillion.

Among the bandwidth, which went unsold, was the valuable 700 MHz which telcos gave a miss, citing high base price. The band is considered premium because of better penetration indoors. Trai recommended fixing a lower base price of Rs 6,568 crore per MHz, 43 per cent lower than Rs 11,485 crore set in the 2016 auction.

The government, which did not auction any spectrum in 2017-18 and 2018-19 fiscal years, wants to hold the country’s biggest auction of over 8,000 MHz of airwaves this year.

In August 2018, Trai said the 3,300-3,600 MHz band, expected to be the primary band for 5G services, should be auctioned as a single band and in blocks of 20 MHz each at Rs 492 crore per MHz.

Business Standard

Explained: Is mobile tariff hike by Airtel, Vodafone Idea justified?

Telcos have reduced their tariffs so much that they earn only Rs 75 per user per month, nationally.

From the first week of December, Airtel and Vodafone-Idea are expected to raise their tariffs, and users will need to pay more. But is the tariff hike necessary? Telecom companies don’t have too many options.

Almost every Indian has a mobile phone now, though all do not use data. This has resulted in an explosion in data consumption. An average Indian now uses 10 GB data per month.

This is a direct result of the price war between Reliance Jio and the two incumbents. 

Telcos reduced their tariffs so much that they earn only Rs 75 per user per month, nationally and across the industry , for all the data that we use: From streaming YouTube videos and video calls over WhatsApp. Leading telcos quote their ARPU above Rs 100, owing to their own calculations.

Mobile data has become so affordable that an average Indian pays only 0.6 per cent of his/her monthly income on it . But things have been tough for telecom companies: They ended up paying Rs 1 trillion over five years on spectrum charges and licence fees. This does not include what Airtel and Voda-Idea need to pay as dues.

Further, for better quality data and voice calls, they need to invest in more towers. India has one tower for nearly 3,000 people, worse than most Asian peers

Tariff hike, however, may not pinch consumers much. A 15 per cent hike would require consumers to pay nearly Rs 15 more per month, but would make company finances more sustainable

Business Standard

Telecom tariff: Jio to follow Airtel, Voda Idea, raise rates in a few weeks

In anticipation of the tariff hike, Reliance Industries' market cap crossed the Rs 9.5-trillion mark on Tuesday.

Reliance Jio, which disrupted the telecom market ever since its commercial launch in 2016, has decided to follow rivals Bharti Airtel and Vodafone Idea in raising mobile phone tariffs. Having kicked off a no holds barred tariff war three years ago, the Mukesh Ambani-owned firm is now stepping back.

According to sources in the know, the tariff hike decision by the telcos is in response to the government wanting the industry to stop the long-drawn price war and set their house in order. In the absence of a tariff hike, Telecom Regulatory Authority of India (Trai) may have been forced to impose a floor price for the operators. Also, the government has been of the view that any relief measure for the telecom industry should be given only after telcos get out of the price war, that has left the incumbent operators with record losses and high debt, the sources said.

On Tuesday evening, Jio announced it would take measures including “appropriate increase in tariffs’’ in the next few weeks. The move, industry watchers believe, may bring down the pitch of the bitter battle between the incumbents and a new player. Jio’s announcement comes a day after Airtel and Vodafone Idea said they were hiking tariffs from December 1.

In its statement, Jio has asked the government to mandate a ‘2G mukt’ India in the shortest time if the objectives of Digital India mission has have to be achieved. The Jio demand for a 2G-free country is significant as it’s the only operator offering just 4G services pan-India. Bharti Airtel and Vodafone Idea still have a bulk of their customers using 2G.

In anticipation of the tariff hike (the announcement came after market hours), Reliance Industries’ market cap crossed the Rs 9.5-trillion mark on Tuesday.

It’s the first Indian company to reach the milestone, with its stock price rising 3.59 per cent, closing at Rs 1,511.55 on the NSE. Shares of rival firms Bharti Airtel and Vodafone Idea also rallied by 8.66 per cent and 38.2 per cent, respectively.

After the Supreme Court judgment, asking telcos to pay dues related to adjusted gross revenue (AGR) that could amount to more than Rs 1.33 trillion, the incumbents sought a moratorium on deferred spectrum payments and a cut in spectrum user charges among other relief measures.

Business Standard

Jio, BSNL undecided on tariff hike, taking stock of evolving scenario

Jio is waiting for the tariffs numbers announcement by the telcos duo and will react after that.

Faced with almost no choice and amidst reports of government moving to set a floor price for voice and data, two hardest-hit telcos - Airtel and Vodafone - on Monday announced their decision to raise tariffs from next month while their arch-rival Reliance Jio has so far not made up its mind and is watching the developments.

According to BSNL sources, the PSU will examine the situation and react.

PSU sources said it is taking stock of the evolving scenario and as both the telcos have not announced how much the increase in the tariffs will be, so the PSU will examine and then react on the proposed hike once these two announce the quantum.

After remaining free on voice calls for three years, Reliance Jio, from October, started charging 6 paise a minute for making calls to any non-Jio number after Trai floated a consultation paper on seeking deferral of the zero IUC regime citing non-symmetry traffic. Currently tariffs are under forbearance.

A questionnaire on tariff hike from their side sent to Jio had not been responded at the time of writing and Jio officials were also not responsive to the tariff hike query of IANS.

However, sources said Jio is waiting for the tariffs numbers announcement by the telcos duo and will react after that.

After tariffs remained subdued for the last three years since Jio's entry, finally Airtel and Vodafone announced plans to hike them after the Supreme Court asked them to follow DoT's AGR computation method on revenue sharing with the government. By that both are liable to pay about Rs 74,000 crore by January 24, 2020, though a panel of Secretaries to the Central government are looking at options of giving them some relief through cut in levies and moratoriums and a longer repayment period.

Vodafone Idea last week reported a consolidated loss of Rs 50,921 crore - highest ever loss posted by any Indian corporate - for the second quarter ended September 30, on account of liability arising out of the Supreme Court order in the adjusted gross revenue case. Airtel posted a record quarterly loss of Rs 23,045 crore.

Business Standard

AGR impact: Voda Idea posts biggest quarterly loss in India Inc history

AGR liability leads to pre-tax loss of Rs 36,959 crore.

Vodafone Idea revealed a gigantic pre-charge loss of Rs 36,959 crore for the July-September quarter after it accommodated installments identified with balanced gross incomes, or AGR. The organization endured a shot of Rs 30,774 crore (counting AGR) for the quarter. This prompted lost Rs 50,922 crore at the net level, the most noteworthy ever for an Indian organization. The organization had posted lost Rs 4,974 crore in the year-back quarter while the misfortune in the June quarter was Rs 4,874 crore.

Offering a reprieve up of the liabilities by virtue of AGR, the organization provisioned for Rs 27,610 crore because of permit expenses and Rs 16,540 crore, remembering interest and punishments for intrigue, identified with range utilization charges (SUC) up to September 30, 2019....Article Source : BS

Liabilities by virtue of AGR are Rs 25,678 crore. The gauge depends on requests got from Department of Telecommunications (DoT) and extra gauges.

While the organization has accommodated SUC, taking into account that no range is utilized for producing non-telecom pay, it is assessing the toll of SUC on such salary. The organization is documenting an appeal to survey the Supreme Court judgment of AGR.

AGR sway: Voda Idea posts greatest quarterly misfortune in India Inc history

Income from activities remained at Rs 10,844 crore, down 3.8 percent down from the last quarter. This was barely lower than the Bloomberg agreement evaluations of Rs 10,925 crore. The outcomes were affected via regularity and extreme floods in a large number of its key markets. On a year-on-year premise, income recouped by 41.5 percent.

Income before intrigue, expense, deterioration, and amortization (Ebitda) for the quarter diminished to Rs 3,347 crore, a successive decrease of 8.3 percent since lower income was somewhat counterbalanced by proceeded with cost cooperative energy acknowledgment. The supporter base sneaked past another 9 million during the quarter to 311.1 million with normal income for every client (ARPU) at Rs 107 contrasted with Rs 108 in Q1.

"The supporter beat keeps on improving, arriving at 3.5 percent in Q2FY20 contrasted with 3.7 percent in Q1FY20 and 7.2 percent in Q4FY19. During the quarter, net supporter augmentations have likewise expanded during the quarter," said the organization.

Vodafone Idea needs fresh round of equity infusion by 2021, say lenders

All telecom firms to remain under stress despite tariff hike.

Business Standard : Despite slashing its capital expenditure, Vodafone Idea would require fresh round of equity infusion from its promoters by 2020-21, as its cash, including proceeds from the Indus stake sale, would last only for the next 15 months.

The company had raised Rs 25,000 crore in May this year via a rights issue in which promoters — Vodafone Plc of the UK and Birla Group — invested Rs 11,000 crore and Rs 7,250 crore, respectively, according to their shareholding in the company.

The rights issue was priced at the rate of Rs 12.50 a share. Since the rights issue closed, Vodafone Idea’s share price fell by half to Rs 6.22 as on Thursday and bankers said the firm would need more funding to keep its operations going. Vodafone Idea owns 11.5 per cent stake in telecom tower company, Indus Towers, and expects to raise Rs 5,000 crore by selling the stake.

The equity route is important as Vodafone Idea’s debt touched Rs 1.15 trillion as of March 2019, making it difficult to raise fresh debt, said global banking firm, Credit Suisse, in a report.

A Vodafone Idea spokesperson declined to comment. Lenders said Vodafone Idea is not alone. These companies will find it tough to meet their cost unless they raise tariff significantly or raise fresh debt if they want to participate in the fifth-generation spectrum auction.

As of March this year, Bharti Airtel had a debt of Rs 1.06 trillion, while Reliance Jio had a debt of Rs 1.12 trillion. The deferred spectrum charges of the sector to the government were another Rs 2.95 trillion.

On Wednesday, Jio passed on the interconnection usage charges of 6 paise a minute to its customers, thus, raising the prospects of a tariff hike by the sector and cheering shareholders of telecom firms. “We expect Vodafone Idea’s leverage (net debt to earnings before interest, taxes, depreciation, and amortisation, or Ebitda) to decline to 10.5x by 2021-22 (FY22) after the expected price hike, but it will still be higher than the globally acceptable levels of less than 4x,” said Credit Suisse.

Analysts said the financial health of the sector is fast deteriorating as the free cash flow generation remained negative for the sector in the past four years. This led to high leverage for the mobile operators, but the investments in the sector are likely to remain high, given the capacity requirements with surging data growth.

Reliance Jio's festive offer of low-priced phone led by piling inventory

Last week, Jio, telecom arm of Reliance Industries, said it would during the Dussehra and Diwali period make the JioPhone available for a special price of Rs 699.

Reliance Jio’s festive offer of a lower-priced JioPhone is likely to have been driven by higher inventory of the feature phone in a market where new buyers are increasingly turning to smartphones.

“While this will boost Jio’s October subscriber additions, given that this offer is limited to the festive season, it is unlikely to clear the 40 million in channel handset inventory. Thus, an extension cannot be ruled out. In addition to risk of increased subscriber churn, the cut in the price may adversely impact Airtel’s and Vodafone Idea’s ability to monetise voice subscribers,” wrote Deepti Chaturvedi, analyst at CLSA.

Last week, Jio, telecom arm of Reliance Industries, said it would during the Dussehra and Diwali period make the JioPhone available for a special price of Rs 699, against the current Rs 1,500. Feature phone users can get a JioPhone for Rs 501 under an exchange; they will have to pay another Rs 594 upfront for six months of service, taking the effective upfront cost of switching to Rs 1,095.

Chaturvedi says there have been almost 110 million 4G (fourth-generation technology) feature phone shipments between June 2017 and September 2019. The JioPhone user base itself is around 70 million. So, at least 40 million phones are in the inventory and this will take three or four months to clear.

“More, the recent stepdown in Jio’s monthly subscriber addition from an average of 10 million in FY19 to 8 million during April-August (first five months of FY20) could also drive Reliance Jio to extend this offer. After two years of launch, JioPhones have gained a mere estimated 15 per cent share of the almost 500 million feature phone base. Extension of this offer will help boost its share in the future,” wrote Chaturvedi.

The firm said the offer was targeted at the 350 million 2G users, currently paying extremely high rates for poor quality data. “This offer indicates Jio’s intention to continue to focus on user addition, especially at the low-end. While we consider the ARPU (average revenue per user) upgrade decision — particularly on its smartphone offering — to be independent to this offer, we do not expect tariff (rate) hikes any time in the near term (for the next six months at least),” said Sachin Salgaonkar, analyst, Bank of America Merrill Lynch.

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