Reportedly the indian telecom industry is going through a churn, as one witnessed by the losses posted by vodafone idea and Airtel on thursday, due to the hit they took after the Supreme Court’s verdict on Adjusted Gross Revenue (AGR). Furthermore Telcos have to pay Rs 92,000 crore following the AGR order, with Bharti Airtel and vodafone idea stuck with the biggest chunk of dues. Neither company had provisioned for it in their books.
Perhaps vodafone idea showed a massive net loss of Rs 50,921 crore for the last quarter and now, the company is appealing to the government to go slow on the collection of the old dues as well as to bring down the licence fees and spectrum charges. Furthermore the company has now reportedly appealed to the government for relief and the government of india is in an unenviable position. Meanwhile having announced a reduction in corporate tax and taken on a revenue loss of Rs 1,45,000 crore, there is the threat of the fiscal deficit slipping from the 3.3% it had committed to maintaining for the year ending march 2020.
Moreover vodafone idea and Airtel, which have also posted very poor financial results for the quarter, told the government that if it does not step in and do something, their very survival is at stake. Apparently the government, already grappling with a lower GDP and economic slowdown may not want to see the telecom companies collapsing and hence the bad news will further dampen prevailing poor sentiments.