Airtel needs to tackle AGR crisis, tepid revenues before taking on Jio
Additional AGR provisioning has taken a toll on Bharti Airtel's profit and loss statement, while it still struggles to bring revenues to a desirable level
- Jul 31, 2020,
- Updated Jul 31, 2020 11:23 PM IST
Even as the telecom sector awaits the Supreme Court decision on staggered payment of Adjusted Gross Revenue (AGR) dues, the second-largest operator in the country - Bharti Airtel - has taken a yet another hit on its profit and loss statement. The additional AGR provisioning of Rs 10,744.4 crore in the first quarter of FY21 takes the company total provisioning to Rs 40,244.4 crore. This is still Rs 3,736 crore short of the DoT's assessment of the AGR dues towards Airtel.
Nevertheless, it seems that Airtel is close to settling the AGR issue unless the Supreme Court, which is slated to hear the Department of Telecommunications (DoT) plea in this matter on August 10, refuses to provide relief on repayments - which seems like the worst-case scenario at the moment.
The Sunil Mittal-controlled telco has sufficient cash on the books (Rs 13,551 crore as on March 31, 2020) to deal with the AGR blow. Then, there's also a marked improvement in the operating scenario, especially since last December when the sector went for a tariff hike. Because of its ability to withstand the hyper-competitive environment in the past, Airtel has no access issues with raising more funds, if needed - like it had raised $3 billion in January to repay AGR dues. It may be noted that Airtel has already paid Rs 18,004 crore to DoT, and the balance will be paid depending on the next SC order.
Even as the telecom sector awaits the Supreme Court decision on staggered payment of Adjusted Gross Revenue (AGR) dues, the second-largest operator in the country - Bharti Airtel - has taken a yet another hit on its profit and loss statement. The additional AGR provisioning of Rs 10,744.4 crore in the first quarter of FY21 takes the company total provisioning to Rs 40,244.4 crore. This is still Rs 3,736 crore short of the DoT's assessment of the AGR dues towards Airtel.
Nevertheless, it seems that Airtel is close to settling the AGR issue unless the Supreme Court, which is slated to hear the Department of Telecommunications (DoT) plea in this matter on August 10, refuses to provide relief on repayments - which seems like the worst-case scenario at the moment.
The Sunil Mittal-controlled telco has sufficient cash on the books (Rs 13,551 crore as on March 31, 2020) to deal with the AGR blow. Then, there's also a marked improvement in the operating scenario, especially since last December when the sector went for a tariff hike. Because of its ability to withstand the hyper-competitive environment in the past, Airtel has no access issues with raising more funds, if needed - like it had raised $3 billion in January to repay AGR dues. It may be noted that Airtel has already paid Rs 18,004 crore to DoT, and the balance will be paid depending on the next SC order.