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Airtel flags ‘going concern’ risk after big Q2 loss; key takeaways

Airtel reported deferred tax benefit of Rs 8,932 crore that helped it pare some of the losses.|
Updated: Nov 14, 2019, 09.17 PM IST
The company said it will require significant additional financing to discharge its obligations.
Bharti Airtel on Thursday reported its biggest quarterly losses at Rs 23,044 crore for the quarter ended September 30, affected by Rs 28,450 crore provisions towards adjusted gross revenue (AGR) dues.

The AGR provision amount includes principal amount of Rs 6,164 crore, interest Rs 12,219 crore, penalty Rs 3,760 crore and interest on penalty Rs 6,307 crore.

Analysts in an ETNow poll had projected a loss of Rs 1,425 crore. The company had posted a profit of Rs 118.80 crore in the same period last year.

Here are the key takeaways:

AGR provisions hit profits
Airtel has provided Rs 28,450 crore for the dues towards government after the AGR ruling by the Supreme Court. The company said total provisions as of September 30, aggregated Rs 34,260 crore.

Tax windfall cushions loss
The company reported deferred tax of Rs 8,932 crore for the quarter that helped it pare some of the losses.

If it was not this windaffal, this would have been the biggest quarterly loss for any corporate entity in India. Tata Motors has posted the biggest quarterly loss for Indian corporates in its December 2018 quarter earnings, in which it reported a loss of Rs 26,993 crore, on an exceptional item of Rs 27,703 crore.

Mobile data traffic grows
Mobile data traffic on the network grew 81 per cent year-on-year. Mobile 4G data customers increased by 56.9 per cent to 10.31 crore in the corresponding quarter last year.

Digital TV services hit
Revenue for TV services dropped 22.9 per cent to Rs 789 crore from Rs 1,024 in the same quarter last year. Revenue from home services and tower infra businesses also suffered losses. Airtel reported a drop of 2.35 per cent in home services revenue to Rs 547 crore while a 3 per cent fall in tower infra business.

Mobile services see some traction
Revenue from mobile services in the domestic market increased 7.1 per cent to Rs 10,981 crore from Rs 10,252 crore in the same quarter last year. The Africa business saw 10 per cent growth and revenue from the operations were at Rs 5,915 crore, up from Rs 5,372 crore in Q2FY19.

Battle for survival?
The company said it will require significant additional financing to discharge its obligations under the Supreme Court Judgement. Airtel added that there can be no assurance of the success of management's plans to raise funds in a timely manner.

“This represents a material uncertainty whereby, it may be unable to realize its assets and discharge its liabilities in the normal course of business, and accordingly may cast significant doubt on the Group's ability to continue as a going concern,” said Gopal Vittal, MD and CEO, Airtel.
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