Anil Ambani has resigned from his post of director of Reliance Communications, the telecom company which has filed for insolvency announced on Saturday.
His resignation along with 4 other directors of Reliance Communications comes after the company reported a consolidated loss of Rs 30,142 crore for the second quarter, released on Friday, which is the second worst loss in the telecom market reported in India.
Here are 5 things to know about the development:
Reliance Communications reports mammoth loss in second quarter
The telco reported a mammoth consolidated loss of Rs 30,142 crore for the second quarter which was released on Friday.
The loss was recorded after provisioning for the statutory license fee and spectrum usage fee against a profit Rs 1141 crore, as per the October 24 Supreme Court verdict.
Anil Ambani and 4 others quit as directors
In a notice to the Bombay Stock Exchange on Saturday, the company confirmed that
Chhaya Virani, Ryna Karani, Manjari Kacker and Suresh Rangachar have also resigned from positions of directors.
"Manikantan V., has also tendered his resignation as a director and Chief Financial Officer of the Company earlier. The aforementioned resignations shall be put up to the committee of creditors of the Company for their consideration," the company confirmed.
Second worst loss in Indian telecom sector
The telco’s loss comes in the wake of the Supreme Court order which has changed the definition of Adjusted Gross Revenue (AGR) to include revenues from non-core items.
Reliance Communications reported the second worst loss in the telecom industry in Corporate India, coming behind Vodafone-Idea’s July-September loss of Rs 50,921 crore. Bharti Airtel, another major player, reported a loss of Rs 23,000 crore in the July -September quarter report, released on Thursday.
The SC verdict on Adjusted Gross Revenue
On October 24, 2019, the Supreme Court asked over 15 telecom operators in India to pay Rs 92,000 crore in additional statutory dues. This came after the top court accepted the Department of Telecommunications’ definition of Adjusted Gross Revenue to include revenue from non-core sources. Non core sources include rent, profit on sales of rent, interest and other incomes.
Adjusted Gross Revenue includes the spectrum usage charges and licensing fee charged by the Department of Telecommunications. It is calculated from the revenue earned by the company. However, the telecom companies had argued that AGR should be calculated only based on revenue earned from telecom services.
With the Supreme Court ruling otherwise, the court asked telecom operators to clear their past dues including delayed payment, interests etc with 3 months, furthering stressing the sector.
Reliance Communications set aside Rs 28,31 Cr in past dues.
The telco faced a consolidated loss after setting aside Rs 28,314 crore on revised calculation of AGR based on the new Supreme Court judgement.
The company, which is undergoing insolvency process now, nears the sale of its assets, according to reports. On Friday the telecom company’s share closed at 0.58, falling by 3.28 percent.