Vodafone Idea, Airtel loss sends fund houses in a tizzy

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Published: November 16, 2019 3:06:32 AM

Other than banks, mutual funds too have significant exposure to these two players. As on October, debt mutual funds have invested Rs 5,166 crore in securities issued by both companies, according to a data from Value Research.

Vodafone Idea, Airtel, loss, telecom, Bharti Airtel, Bharti Airtel share, Bharti Airtel news, Bharti Airtel ltd, Bharti Airtel stock, Vodafone Idea news, Vodafone Idea share price, Vodafone Idea ltd, Vodafone Idea loss, Vodafone Idea bse, Vodafone Ideanse, telecom news, telecom sector, telecom industryDebt funds have an exposure of Rs 2,629.51 crore to Vodafone Idea and Rs 2,536.49 crore in Bharti Airtel.

As two stressed telecom players reported a combined loss of Rs 74,000 crore on Thursday, lenders are seen to be closely monitoring the situation. Both Bharti Airtel and Vodafone Idea expressed their doubts to continue as a going concern on Thursday after announcing their September quarter results.

Other than banks, mutual funds too have significant exposure to these two players. As on October, debt mutual funds have invested Rs 5,166 crore in securities issued by both companies, according to a data from Value Research.

Debt funds have an exposure of Rs 2,629.51 crore to Vodafone Idea and Rs 2,536.49 crore in Bharti Airtel. Fund managers who have investments in Vodafone Idea say that everything now depends on the government to give them concessions. If the debt instruments of these telcos are downgraded by rating agencies then fund houses will have to mark down their investments. “We are in talks with Vodafone Idea and they are hopeful that government might give them some relief for the payments. Secondly, we plan to offload our investments in the papers of the company and finally if nothing works we will work with other lenders to get the money,” said head fixed income of leading fund house on condition of anonymity.

The data from Value Research showed that Aditya Birla Sun Life MF, Franklin Templeton MF, Nippon India MF and UTI MF have exposures in Vodafone Idea. As on October, Franklin Templeton MF holds Rs 2,058.07 crore, UTI MF has invested  Rs 327.39 crore and Rs 142.51 crore for Nippon India MF.

Vodafone Idea posted a net loss of Rs 50,922 crore for the second quarter ended September, the highest ever net loss reported by a company in the country. The company’s performance took a hit on account of an exceptional charge of Rs 25,680 crore it took during the quarter, on account of the Supreme Court ruling on AGR. The company has made provision for potential payments that it will have to make to the department of telecommunications (DoT).

Vodafone Idea accounted for the estimated liability of Rs 27,610 crore related to licence fee and Rs 16,540 crore related to spectrum usage charges up to September 30, 2019, including the interest, penalty and interest thereon of Rs 33,010 crore. Meanwhile, Bharti Airtel posted a net loss of Rs 23,045 crore for July-September.

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