Tata Comms profit hit due to SC verdict

livemint.com:

Tata Communications’ profit for the quarter ended December 2023 fell by 88% to ₹45.1 crore compared to the year before, missing estimates, as it provisioned for the impact of the Supreme Court judgment on treating licence fee paid to the government as capital expenditure instead of revenue expenditure for calculating taxes. “Even though the company is not a party to the above judgment and its case is different and distinguishable from the above judgment, as a matter of prudence the company has assessed and recorded a provision of ₹185.52 crore towards interest which has been disclosed as an exceptional item and a provision of ₹21.09 crore towards tax (net) due to change in effective tax rate on account of adoption of new tax regime," the enterprise connectivity provider said Thursday. The telecom player also accounted for deferred tax on refunds it received from pending tax litigations with the government, said MD and CEO A.S.

Lakshminarayanan in an interaction with Mint following the results. “We have a long litigious past in terms of tax disputes and others. So we’ve been cleaning up some of that and that’s coming into the profit line as and when we clean up.

The effective interest rates have gone up so that is another reason," the top executive said. The Supreme Court’s decision in October last year impacted India’s older telecom players—Bharti Airtel, Vodafone Idea and Tata Communications—as it set aside a December 2013 judgment of annual licence fee on adjusted revenue being a revenue expenditure. The telcos have since provisioned for a larger tax outgo in their second quarter results.