AGR provisioning: Bharti Airtel posts pre-tax loss of Rs 31,334 crore in Q2

AGR provisioning: Bharti Airtel posts pre-tax loss of Rs 31,334 crore in Q2

Operating performance improved sharply but net loss at Rs 23,045 is the third highest by an Indian corporate in a quarter Megha Manchanda  |&nb

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Operating performance improved sharply but net loss at Rs 23,045 is the third highest by an Indian corporate in a quarter

Megha Manchanda  |  New Delhi 

on Thursday reported a pre-tax loss of Rs 31,334 crore for the quarter ended September (Q2) after the company provided for outstanding payments to the central government on account of Supreme Court judgement on adjusted gross revenues (AGR). The pre-tax loss in the year ago quarter stood at Rs 1,998 crore.

Given the jump in deferred taxes (tax reversal) the reported loss at the net level came in at Rs 23,045 crore. The year ago number was a profit of Rs 118.8 crore. Before provisioning for the exceptional item the company’s net loss stood at Rs 1,123 crore for recently concluded quarter.

“The company is hopeful of relief and in the absence of the same, has provided for an additional amount aggregating Rs 28,450 crore as a charge for the quarter (comprising principal 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) with respect to the license fee as estimated based on the court judgement and spectrum usage charges (SUC) as estimated based on the definition of AGR,” Airtel said in a statement.

The liabilities /provisions as on September 30, 2019 aggregate to Rs 34,260 crore comprising 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.

On October 24, the Supreme Court delivered a judgement in relation to a long outstanding industry-wide case upholding the view considered by DOT in respect of the definition of AGR. The apex court has allowed a period of three months to the affected parties to pay amounts due to DOT.

Gopal Vittal, MD and CEO, India & South Asia said, “On the AGR verdict of the Hon’ble Supreme Court, we continue to engage with the government and are evaluating various options available to us. We are hopeful that the government will take a considerate view in this matter given the fragile state of the industry.”

On the taxes front, the government has now allowed domestic companies an option to pay income tax at an effective tax rate (ETR) of 25.17 per cent instead of the earlier 34.94 per cent. After the government reduced tax for companies, the effective MAT (minimum alternate tax) rate for the current quarter was 21 per cent, which in previous quarter was at 25 per cent. This has led to the tax reversal as reported in Airtel’s September quarter results.

Prior to exceptional item such as AGR and taxes, the loss came in at Rs 623 crore in the July-September quarter, much lower than the year ago loss of Rs 1,854 crore.

This reduced loss is consequent to the sharp improvement in the company’s operational performance.

The company’s India revenues increased by 3 per cent, on year-on-year basis to Rs 15,361 crore.

Average revenue per user (ARPU) jumped 28% at Rs 128 for the quarter ended September 30, driven mainly by the increased data customer base. ARPU is the total revenue of the operator divided by the number of users. ARPU stood at Rs 100 in the corresponding year ago period. However, on a sequential basis the ARPU remained flat as compared to Rs 129 in June 2019 quarter.

Led by lower costs especially network operating expenses, selling & marketing as well as other expenses, the company’s operating profit shot up 41 per cent to Rs 8,928 crore, which was better than the Bloomberg consensus estimate of Rs 8,388 crore. Consolidated operating profit margins too saw a jump from 31.5 per cent in year ago quarter to 42.3 per cent in Q2.

The consolidated revenue of was up by 4.7 per cent at Rs 21,199 crore in the just concluded quarter.

Airtel’s data customer base grew 27.2%, on-year 124.24 million in the reporting period as against 9.77 million in the year-ago period. Data usage per customer rose 42.2%, year-on-year, to 13,116 megabytes.

The company’s revenue from India mobile services was Rs 10,812 crore in Q2, up 7.4% from Rs 10,070 crore in the same period, last fiscal, and a per cent higher than June quarter figure of Rs 10,724 crore.

The company’s mobile subscriber base grew to 279.43 million in the September quarter from 276.81 million in the preceding quarter.

As compared to Airtel, Reliance Jio Infocomm posted a net profit of Rs 990 crore in the September quarter, up 45.4% year-on-year and the company’s operating revenue rose 33.7% year on year to Rs 12,354 crore.

Ahead of results, shares closed at Rs 362.65, down by 1.59 per cent compared to previous close on the BSE.

First Published: Thu, November 14 2019. 20:35 IST