Vodafone Idea chief and Aditya Birla Group chairman Kumar Mangalam Birla. Photo: AFP

Troubled telecom operator Vodafone Idea posted a loss of 64.4 billion rupees (US$900 million) in the third quarter that ended in December, as it continues to bleed due to the nearly three-year-long price war and a recent Supreme Court order on the computation of Adjusted Gross Revenue. In the same quarter in 2018, the company posted a loss of 50 billion rupees.

Vodafone Idea’s total income fell by 5% to 113 billion rupees in the third quarter of 2019-20 from 119 billion rupees a year ago, according to a regulatory filing. The company’s finance costs surged almost 30% to 37.2 billion rupees, while depreciation went up by 23% to 58.8 billion rupees.

The company’s average revenue per user for the third quarter inched up to 109 rupees from 107 rupees in the second quarter, but rival operators Bharti Airtel (135 rupees) and Reliance Jio (128.4 rupees) fared much better.

However, when compared sequentially, the company’s losses are substantially lower than the 509-billion-rupee loss suffered in the September quarter, when it made provisions for statutory dues following the Supreme Court order on adjusted gross revenue (AGR).

The court had widened the scope of adjusted gross revenue to include income from non-core items. The dispute arose when telecom companies migrated to a new system offered by the government in 1999, under which operators agreed to share a certain percentage of revenue with the government.

This legal case dragged on for 14 years, with operators arguing that the revenue should be made up of income from telecom services. But the Department of Telecommunications said it should include all revenue earned by an operator, including non-core telecom operations. The court delivered its judgment last October in favor of the department.

To comply with the judgment, Vodafone Idea needs to pay over 530 billion rupees ($7.45 billion) for its license fee, spectrum usage charge, interest and penalty dues to the department. Some 15 telecom companies need to pay around 1.47 trillion rupees ($20.6 billion).

Ravinder Takkar, the managing director and CEO of Vodafone Idea, said: “We continue to actively engage with the government seeking relief on the AGR and other matters. Post dismissal of our review petition, we have filed for modification of the supplementary order with Supreme Court”. He said the company remains focused on rapid network integration, as well as 4G coverage and capacity expansion in its key markets.

Takkar noted that the company’s 4G subscriber additions had been robust and it now leads the league tables on 4G data download speeds across several states, metros and large cities.

“After several quarters of pressure on topline, we witnessed consistent revenue turnaround from September onward, [that is] before the recent price hikes. The tariff increase effective in December should further help in improving revenue performance going forward,” the Vodafone Idea CEO said in a statement.

All telecom companies have raised tariffs – by as much as 40% – in December.

Vodafone Idea’s results come three weeks after the Supreme Court agreed to hear its petition to modify its earlier order. Vodafone Idea, plus Bharti Airtel and the now-defunct Tata Teleservices, filed a modification petition in the court, asking that they be allowed to discuss the modalities and payment timelines with the department.

Last week, the UK-based Vodafone Group Plc said that the outlook for Vodafone Idea, its telecom joint venture with the Aditya Birla group in India, remains critical and the company is seeking relief from the Indian government.

In December, Aditya Birla Group chairman Kumar Mangalam Birla said warned that Vodafone Idea would have to shut shop if there was no relief from the government following the AGR verdict.

Also read: Vodafone says Indian JV in critical state

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