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Bharti Airtel share falls over 4% after telco defers Q2 earnings post SC order on AGR

Bharti Airtel share price was the top loser on Sensex falling up to 4.06% to Rs 358.25 on BSE.

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Bharti Airtel share falls over 4% after telco defers Q2 earnings post SC order on AGR
Bharti Airtel share price has gained 33.58% during the last one year and gained 25.36% since the beginning of this year.

Bharti Airtel share price fell in early trade today after the telco said it has deferred its second quarter earnings after the Supreme Court allowed the government's plea last week to recover adjusted gross revenue (AGR) of Rs 92,000 crore from telecom service providers. Bharti Airtel share price was the top loser on Sensex falling up to 4.06% to Rs 358.25 on BSE. On NSE, Bharti Airtel share price was trading 3.54% or 13.20 points lower at Rs 359.90.

The large cap stock has fallen after two days of consecutive gain.

Also read: Telcos seek reduction in USOF contribution, license fee

Bharti Airtel share price has gained 33.58% during the last one year and gained 25.36% since the beginning of this year.

The telco said in a filing to BSE said, "Please be informed that the management of the Company recommended to the Board of Directors that the agenda item related to the approval of audited financial results for the second quarter (Q2) and half year ended September 30, 2019 which was to be a part of the board meeting today be deferred till November 14, 2019 on account of the fact that more clarity is needed on the AGR matter arising out of recent judgement of Hon'ble Supreme Court. "

"The Company is approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome. The Board of Directors, in its meeting held today, has accepted the management's recommendation and deferred the agenda item relating to the approval of the said financial results till Thursday, November 14, 2019," Airtel added.

On October 24, 2019, the Supreme Court upheld the government's plea on its interpretation of Adjusted Gross Revenue (AGR). A bench of justices Arun Mishra, S Abdul Nazeer, and MR Shah held that most revenue components, "except one or two", would fall within the Department of Telecommunications' (DoT) definition of AGR, thereby ending over 14 years of legal battle between the Centre and the telecom companies.

After the rejection of appeal against the definition of AGR, telecom companies would now have to pay over Rs 92,000 crore to the DoT. The SC said it would later fix a time schedule as to when the telecom companies have to pay the amount.

In a filing in the apex court in August, the DoT had asked telcos to pay up Rs 92,641 crore on account of license fees and spectrum usage charges (SUC), which are decided on the basis of AGR.

Also read: Mukesh Ambani's Reliance Jio tops market with 31.7% revenue share in June quarter; Airtel in 2nd spot

DoT had argued that a wider number of items - interest income, dividend, profits on the sale of assets, insurance claims and forex gains - should be included as components of AGR. Telcos, for obvious reasons, had not agreed to the definition.

The fuss over defining AGR has been dragged so long that the actual dispute amount now remains a small proportion (25 per cent) of the total dues that the DoT is asking for. The Rs 92,641 crore includes Rs 23,189 crore as the disputed amount, Rs 41,650 crore of the levy of interest, Rs 10,923 crore as penalty, and Rs 16,878 crore as interest on penalty. Just about three years ago, the total dues were just Rs 29,474 crore.

AGR is calculated on the basis of spectrum usage charges and licence fees payable by telecom companies. The telecom companies are liable to pay around 3-5 per cent of AGR as spectrum usage charges and 8 per cent of the AGR and licence fees.

By Aseem Thapliyal

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