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Indian telecom firms' foreign partners hit by AGR fallout
New Delhi, Nov 19 - The Supreme Court ruling on adjusted gross revenue (AGR) has not just hit the Indian telecom firms hard, but has eroded the profits of their foreign partners as well, with the latest casualty being Airtel's joint venture (JV) partner Singtel.
Singtel has recently posted its first quarterly loss of $491 million in the second quarter on its S$1.93 billion pre-tax share of Bharti Airtel's provision for past dues, against an earlier profit of $667 million.
SingTel has said in a regulatory filing that "Airtel was impacted by an adverse court ruling against the industry on the definition of 'adjusted gross revenue' (AGR) for the Indian telecom industry."
Airtel, together with other carriers in India, continue to make representations to the Indian government for relief and to seek further clarification on the AGR matter.
In the interim, Airtel has recorded an exceptional provision this quarter of approximately $5.49 billion. Singtel's proportionate share of this provision amounts to $1.93 billion (pre-tax).
Consequently, Singtel recorded a net loss of $668 million this quarter, and a net loss of $127 million for the half year. Excluding Airtel, net profit grew 4 per cent for the quarter and was stable for the half year.
Earlier while announcing the first half (H1) earnings as on September 2019, Vodafone had said: "Loss for the financial period of Euro 1.9 billion primarily reflects losses in relation to Vodafone Idea post an adverse judgement against the industry by the Supreme Court in India".
It had also said: "Free cash flow of around Euro 5.4 billion (previously at least Euro 5.4 billion') as lower cash flow from India and the sale of New Zealand offset the initial accretion from the Liberty Global acquisitions."
A 35.2 per cent stakeholder in Airtel, Singapore's top telecom company SingTel has posted a SGD 668 million (Rs 35.2 billion or $491 million) net loss due to one time provisioning for Airtel's expected payment to the government as AGR dues.
In its second quarter earnings, Airtel has posted a net loss of Rs 23,045 crore as it provided Rs 28,450 crore as a charge for the quarter with respect to the licence fee as estimated based on the Supreme Court judgement and spectrum usage charges (SUC) as estimated based on the definition of AGR (principal Rs 6,164 crore, interest Rs 12,219 crore, penalty Rs 3,760 crore and interest on penalty Rs 6,307 crore).
Singtel Group CEO Chua Sock Koong said in a statement: "Notwithstanding the court ruling, Airtel has made positive strides in the wake of the recent industry consolidation, gaining market share, and increasing mobile service revenue for a third straight quarter.
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