India Supreme Court orders telcos to pay $13b or face action

Agence France-Presse . New Delhi | Published: 22:12, Feb 14,2020

 
 

India’s Supreme Court on Friday ordered top telecom companies to pay $13 billion in unpaid spectrum and licensing fees by March 17 or face punishment in a fresh blow to ailing mobile carriers.

Shares in Vodafone Idea, which is said to be hardest hit by the ruling, fell 23 per cent on Mumbai’s Sensex Index exchange after the court’s announcement.

Bharti Airtel and Reliance Jio — owned by Asia’s richest man Mukesh Ambani — were also hit by the order, which comes after the companies failed to obey an October ruling demanding payment of overdue levies within three months. 

The court has threatened contempt proceedings against the companies and the Department of Telecommunications government officials for non-compliance with that ruling.

The long-running row between the government and India’s big telecoms has centred on how licence and other fees paid by the firms should be calculated.

Companies argue they should be based on income from only their telecoms business, while the court ruled they should be calculated on the amount earned from all business dealings, including handset sales and other income.

On Friday, the companies asked the court for more time to pay, which Justice Arun Mishra described as ‘complete nonsense’.

Vodafone Idea, a joint venture of Britain’s Vodafone Group and India’s Idea Cellular will have to stump up about $3.9 billion.

Airtel has to pay $3 billion while Jio, which escaped with a lighter fee has already paid $1.8 billion.

Vodafone Idea’s ‘survival is in jeopardy as there is no support either from the government or the parent company,’ Baburajan K, editor of TelecomLead.com, told AFP.

‘They have no funds or capacity to service existing customers.’

A Vodafone spokesman said that the company leadership was reviewing  the comments.

Bharti Airtel’s shares rose almost 5 per cent however.

Analysts said that Airtel and Reliance Jio would benefit the most from any Vodafone Idea collapse, which could lead to the Indian market being dominated by two leading companies.

Baburajan said that such a duopoly would ‘weaken’ the Indian telecoms sector and limit choice for its 900 million subscribers.

Jio, which was launched in 2016 and is the top operator in terms of subscribers and revenue, has a relatively light $1.8 billion bill.

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