Care downgrades rating on Vodafone Idea's long-term bank facilities, NCDs

New Delhi: Vodafone Idea on Friday said Care Ratings has downgraded rating on its long term bank facilities and non-convertible debentures citing erosion in the firm's overall risk profile following the SC ruling on AGR dues, as also significant losses in September quarter.

"...the downgrade is on account of significant erosion in the overall risk profile of the company while taking into cognizance of the financial impact of unfavourable ruling of Supreme Court...," the company said in a regulatory filing.

It also takes into account "significant losses in Q2FY20 due to provision related to AGR dues, recognition of deferred assets and provision for additional depreciation/impairment of assets and consequently resulting in the significant deterioration in the tangible net worth and overall debt protection metrics", the filing said.

The credit rating has been revised to BBB- from A- on long term bank facilities and to BBB- from A- in case of non-convertible debentures, the filing added.

"It is hereby informed that Care Ratings (CARE), has downgraded its rating on Long Term Bank Facilities and Non-Convertible Debentures as per the rating rationale uploaded on its website today," the filing said.

In a separate filing the company informed that Crisil has downgraded its rating on non-convertible debentures of Rs 3,500 crores of erstwhile Vodafone Mobile Services Limited (VMSL).

"...the downgrade is on account of substantial impact on the financial risk profile on account of the potential payout against the adjusted gross revenue (AGR) related disputed liability and continued weak operating performance" the company said.

Accordingly, the rating has been revised to BBB- from BBB+ on non-convertible debentures, it added.

The Supreme Court has upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual adjusted gross revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fees to the exchequer.

Earlier this week, Telecom Minister Ravi Shankar Prasad had informed the Lok Sabha in a written reply that Bharti Airtel, Vodafone Idea and other telecom companies owe the government as much as Rs 1.47 lakh crore in past statutory dues, following the judgement.

In the case of Vodafone Idea, the liabilities stand at a cumulative Rs 53,038 crore, including Rs 24,729 crore of spectrum usage charges dues and Rs 28,309 crore in licence fee.

The government earlier this week doled out a Rs 42,000 crore relief to debt-laden telecom companies after it agreed not to take any payments for spectrum they use for the next two years, although it did not offer any relief on AGR dues.