Vodafone Idea reports massive loss as AGR troubles continue

Details: Vaughan O'Grady; Category: Business; 02 July 2020; 4758 views

It’s an unenviable record, but Indian operator Vodafone Idea has certainly achieved it with the announcement that it has reported the highest loss ever for an Indian company.

Earlier this week the company reported a staggering loss equivalent to just under $10 billion in the fiscal year 2019-20.

Not surprisingly perhaps, this sum is related to the company’s adjusted gross revenue (AGR) dues, a long-running saga that may be coming close to some sort of conclusion after the country’s Supreme Court ordered it to make provision for AGR dues in the region of $7 billion.

It’s a figure Vodafone Idea has disputed; nevertheless even its own calculations are a little over $6 billion, while its overall payments so far are only about $862 million.

The next AGR hearing is scheduled for the third week of July. Not too surprisingly, Vodafone Idea says it will continue to actively engage with the government in seeking a comprehensive relief package for the industry.

It’s hard to believe Vodafone Idea can sustain a hit of this size, but there may yet be a delayed repayment plan, although there’s no indication that the government or the Supreme Court will reduce the dues.

So what happens now? In the short term, analysts quoted in the Indian press have suggested the operator raise its prices, though that might hasten customer flight. Vodafone Idea apparently lost nearly 13 million customers, including one million broadband users, in the March quarter. As for investment in 5G, that seems a distant dream, even if the government finally gets round to organising the spectrum auctions.