What now happens to the telecom sector after the massive losses declared by Vodafone Idea, Bharti Airtel and RCOM?

The telecom story has been adequately written about in the last few days and that is evident from the massive losses written off by the telecom companies. In the last few days, there has been a flurry of results from telecom companies with all of them declaring huge losses! Between Vodafone Idea, Bharti Airtel and RCOM, these 3 companies reported net losses of Rs.100,000 crore for the September quarter. These losses were largely driven by the penal AGR charges imposed on these telecom companies under the Supreme Court order. All the telecom companies decided to take a hit on the charges in the September Q2 itself as the DOT had instructed these telcos to pay up in 3 months.

The net result is that there is a big hole in the books of all the telecom companies. Of course, RCOM is already under bankruptcy and that is not a really relevant case as it is under CIRP. The problem is with Bharti Airtel and Vodafone Idea. This write-off has created a big hole in the books of these telecom companies. Take the case of Vodafone Idea. They have reporting average losses of Rs.5,000 crore for the last four quarters and this quarter they have losses of Rs.50,922 crore. RCOM is already insolvent and they have reported losses of Rs.31,800 crore in this quarter. Bharti Airtel had some semblance of profitability but after the latest loss of Rs.27,000 crore, the Bharti top management has affirmed that it could raise serious doubts over their continuance as a going concern. Even assuming that the current problem is sorted out, it will still leave a big hole in the books of these telcos and wipe out large part of their net worth. In short, this raises questions about most of these telecom companies can really see through the next few quarters and what happens to the huge bank loans taken by them?