{"id":3879,"date":"2019-11-18T07:06:43","date_gmt":"2019-11-18T07:06:43","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=3879"},"modified":"2019-11-18T07:07:04","modified_gmt":"2019-11-18T07:07:04","slug":"vodafone-idea-paper-more-pain-for-debt-mf-investors","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/","title":{"rendered":"Vodafone Idea paper \u2013 more pain for Debt MF Investors?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69e3879c09df6\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69e3879c09df6\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/#_Does_it_impact_you_as_a_Mutual_Fund_Investor\" title=\"\u00a0\u00a0\u00a0\u00a0\u00a0 \nDoes it impact you as a Mutual Fund Investor?\">\u00a0\u00a0\u00a0\u00a0\u00a0 \nDoes it impact you as a Mutual Fund Investor?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/#Impacted_Fund_Houses\" title=\"Impacted Fund Houses\">Impacted Fund Houses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/#Schemes_with_significantly_high_exposure\" title=\"Schemes with significantly high exposure:\">Schemes with significantly high exposure:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/#What_lies_ahead\" title=\"What lies ahead\">What lies ahead<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/#Are_you_a_Debt_Fund_Investor\" title=\"Are you a Debt Fund Investor?\">Are you a Debt Fund Investor?<\/a><\/li><\/ul><\/nav><\/div>\n<p>There has been a lot of turbulence in the telecom space for quite some time now. The unprecedented losses declared by Bharti Airtel and Vodafone Idea in their results posted for the last quarter further established this fact. <strong>For the July-September 2019 quarter, Vodafone Idea posted a whopping INR 50,922 crores loss. It is the worst ever quarterly loss posted by any company in India.<\/strong> Bharti Airtel, for the same quarter, posted a loss of INR 23,045 crores.<\/p>\n<p>The huge losses posted have been on account of provisioning for dues related to Adjusted Gross Revenue (AGR) as per the ruling of Supreme Court in this matter.<\/p>\n<p>The Supreme Court ruling referred to a one and a half decade-old case where these companies had sought exclusion of revenues from other non-core activities or operations like rent, dividend income and interest income, sales of assets etc while arriving at the total AGR. The license fee and Spectrum Usage Charge (SUC) are part of this and are calculated as a percentage of AGR. Vodafone Idea set aside INR 25,680 crores as provisions for AGR related dues. Bharti Airtel has set aside INR 28,450 crores for the same.<\/p>\n<p><strong>These losses have been referred to as \u2018notional losses\u2019 as yet and have not been classified as \u2018operating losses\u2019 as the companies are seeking relief from the government.<\/strong><\/p>\n<p>Both the companies have also indicated their inability to function as a \u2018going concern\u2019 in case they are mandated to pay these dues.<\/p>\n<p>(As per Wikipedia, \u201c<em>Going concern<\/em><em> is an accounting term for a company that has the resources needed to continue operating\u00a0indefinitely until it provides evidence to the contrary. This term also refers to a company&#8217;s ability to make enough money to stay afloat or avoid bankruptcy. If a business is not a going concern, it means it&#8217;s gone bankrupt and its assets were liquidated\u00a0\u201d.)<\/em><\/p>\n<h5><span class=\"ez-toc-section\" id=\"_Does_it_impact_you_as_a_Mutual_Fund_Investor\"><\/span><em>\u00a0\u00a0\u00a0\u00a0\u00a0<\/em><br \/>\nDoes it impact you as a Mutual Fund Investor?<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>Yes, if you have invested in particular Debt Mutual Fund schemes which have exposure to stressed securities of these companies.<\/p>\n<p>&nbsp;<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Impacted_Fund_Houses\"><\/span>Impacted Fund Houses<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>Four Fund Houses namely Franklin Templeton India MF, Aditya Birla Sun Life MF, UTI MF and Nippon India MF had a combined exposure of ~INR 2,000 crores as on October 31, 2019 to Vodafone Idea\u2019s debt securities.<\/p>\n<p>&nbsp;<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Schemes_with_significantly_high_exposure\"><\/span>Schemes with significantly high exposure:<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p><img loading=\"lazy\" class=\"aligncenter size-full wp-image-3880\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2019\/11\/VodaExposure.jpg\" alt=\"\" width=\"1280\" height=\"686\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2019\/11\/VodaExposure.jpg 1280w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2019\/11\/VodaExposure-300x161.jpg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2019\/11\/VodaExposure-768x412.jpg 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2019\/11\/VodaExposure-1024x549.jpg 1024w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/>Data Courtesy: Outlook Asia \/ Nagpal Manoj<\/p>\n<p>&nbsp;<\/p>\n<h5><span class=\"ez-toc-section\" id=\"What_lies_ahead\"><\/span>What lies ahead<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>The rating of Vodafone Idea paper still stands at A- \u00a0(as rated by Brickwork Ratings last week). However, with these developments, the scenario might change. There has been no default so far and thus no markdown as yet, as most of the stakeholders are on a \u2018wait and watch\u2019 mode. <strong>Vodafone Idea\u2019s total debt of over INR 99,000 crores has had serious repercussions on its share price as well, which was down to less than INR 3, an almost 95% fall from its stock price two years ago. <\/strong>The company\u2019s owners, India\u2019s Aditya Birla Group and UK\u2019s Vodafone, have ruled out any further capital infusion in the company.<\/p>\n<p>Bharti Airtel has had a significant impact as well, though the street is of the view that it stands to gain from this episode, even if it has to make the entire payment.\u00a0 Investors foresee gains in the market share for Bharti Airtel in case Vodafone Idea chooses to end its India operations. This is because Airtel\u2019s financial position, otherwise, is quite sound.<\/p>\n<p>&nbsp;<\/p>\n<h5><span class=\"ez-toc-section\" id=\"Are_you_a_Debt_Fund_Investor\"><\/span>Are you a Debt Fund Investor?<span class=\"ez-toc-section-end\"><\/span><\/h5>\n<p>As a priority move, check for concentration risk \u2013 any exposure of more than 5% should be a cause for concern. A well-diversified scheme would be a better choice.\u00a0 For understanding and assessing Debt Funds, read more here &#8211; <a href=\"https:\/\/kuvera.in\/blog\/ratings-downgrade-credit-risk-and-assessing-debt-funds\/\">Ratings-downgrade-credit-risk-and-assessing-debt-funds\/<\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit\u00a0<a href=\"https:\/\/www.kuvera.in\/\"><strong>kuvera.in<\/strong><\/a>\u00a0to discover\u00a0<a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"><strong>Direct Plans<\/strong><\/a>\u00a0and\u00a0<a href=\"https:\/\/kuvera.in\/user\/login\"><strong>start investing today.<\/strong><\/a><\/p>\n<p>#MutualFundSahiHai, #KuveraSabseSahiHai!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There has been a lot of turbulence in the telecom space for quite some time now. The unprecedented losses declared by Bharti Airtel and Vodafone Idea in their results posted for the last quarter further established this fact. For the July-September 2019 quarter, Vodafone Idea posted a whopping INR 50,922 crores loss. It is the [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/vodafone-idea-paper-more-pain-for-debt-mf-investors\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":3886,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[91],"tags":[292,290,291,294,293,289],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Vodafone Idea paper \u2013 more pain for Debt MF Investors? - Kuvera<\/title>\n<meta name=\"description\" content=\"Vodafone Idea posted a whopping INR 50,922 crores loss raising doubts on its ability to service its already sky high debt. 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