The rating agency has downgraded Vodafone Idea from A plus with negative outlook to A minus watch with negative implications.
"The Company is hopeful of relief and in the absence of the same, has provided for an additional amount aggregating Rs 28,450 crore as a charge for the quarter with respect to the license fee as estimated based on the court judgement and spectrum usage charges (SUC) as estimated based on the definition of AGR", the company said in a statement.
The Supreme Court last month upheld the DoT's view on AGR. According to reports, it is the biggest ever quarterly loss in India's corporate history.
It added that during the financial year ended March 31, 2019, the company had classified Rs 10,206.2 crore from non-current borrowings to current maturities of long-term debt for not meeting certain covenant clauses under the financial agreements for specified financial ratios as on March 31, 2019.
"Following the Supreme Court judgement on the AGR [adjusted gross revenue] matter, the company has recognised a charge of ₹256.8 billion (Rs 25,680 crore) in the financial statements", Vodafone Idea said in a statement on Thursday.
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Vodafone Idea's leadership said the company's recently launched Rs 45 prepaid all-rounder tariff pack is seeing decent market traction among 2G device users while its recently launched RedX postpaid plan, priced at Rs 999 and offering 50% higher speeds, has received strong response from high-ARPU customers.
"The company's ability to continue is dependent on obtaining relief from the government and positive outcome of the proposed legal remedy", the telco said.
Thus the liabilities/provisions as at September 30, 2019 aggregate Rs 34,260 crore (comprising principal of Rs 8,747 crore, interest of Rs 15,446 crore, penalty of Rs 3,760 crore and interest on penalty of Rs 6,307 crore). The two companies are the worst hit by the court ruling.
Airtel, Vodafone Idea and other telecom operators have to pay the government a whopping Rs 1.4 lakh crore following the recent Supreme Court order that has sent shock waves through the industry which is already grappling with losses and billions of dollars in debt. The firm's consolidated revenue was ₹21,131 crore, up 5% from ₹20,148 crore in the year-ago quarter.
Bharti Airtel and Vodafone Idea shares gained Friday in Mumbai trading on optimism the government may provide help for the companies and as operating results showed some strength.
India revenues for the quarter stood at ₹15,361 crore, up 3%, primarily led by growth in mobile revenues.
Meanwhile, this is only the second quarterly loss for Bharti Airtel in the last 14 years, Mint reported.