Bharti Airtel is looking to raise around Rs 21,000 crore ($3 billion) so that it can pay the Supreme Court-directed Adjusted Gross Revenue (AGR) dues. Its current cash flows are not large enough to pay the dues in full in a short period of time, according to a Business Standard report. The fundraising plans depend on the Supreme Court’s reaction to Bharti Airtel’s review petition against the top court’s verdict, the report said. MediaNama has reached out to Airtel for comment.
While it won’t be very difficult for banks to offer fresh lending to Bharti Airtel, given its improved consolidated operations and market capitalisation, this funding might come at higher costs, the BS report said.
Vodafone Idea is also planning to file a review petition challenging the SC’s AGR verdict, and if that doesn’t help, the company might consider filing a curative petition, CEO Ravinder Takkar said during a call with investors on November 15.
What was SC’s verdict on AGR? Last month, the apex court had ordered telecom companies to include non-core income for calculation of Adjusted Gross Revenue (AGR), and asked them to pay Rs 92,640 crores to the Centre. This has hit Vodafone Idea and Bharti Airtel the most.
Following the judgement, the Cellular Operators Association of India (COAI) wrote to the Department of Telecommunications, seeking its intervention, and argued that such payments would lead to a crisis at the companies and would cause distress to the sector as a whole. While Bharti Airtel and Vodafone Idea had backed COAI’s views in the letter, their rival Jio had criticised it.
Impact of SC’s AGR verdict on Airtel and Vodafone: Bharti Airtel reported a net loss of Rs 23,045 crore in Q2FY20 — a massive increase from the Rs 2,866 crore net loss which it had posted in Q1FY20. Airtel said that the Supreme Court’s recent verdict on AGR (Adjusted Gross Revenue) had “significant financial implications on the company”. Without the SC verdict, Airtel’s loss for Q2FY20 would have been Rs 1,123 crore.
Meanwhile, Vodafone Idea posted a staggering loss of Rs 50,897, meaning, that the two telcos accounted for about Rs 74,000 in losses this quarter. In fact, Vodafone Idea’s loss is the biggest quarterly loss in Indian corporate history.
Airtel submits bid for RCom: Amidst all this, Bharti Airtel has submitted its bid for acquiring assets of Reliance Communications (RCom) and its subsidiaries, Reliance Telecommunications and Reliance Infratel. Apart from its assets in real estate, RCom assets on sale include spectrum holding of 122 MHz which the company had estimated to be Rs 14,000 crore before insolvency proceedings. The other assets include tower business (Rs 7,000 crore), optical fibre network (Rs 3,000 crore) and data centres (Rs 4,000 crore). It is unclear how Bharti Airtel plans to fund these purchases as it faces cash flow issues. We are awaiting Airtel’s response on this.