Vodafone Idea shares tumble 23% after India orders it to pay billions in dues




General Images of Telecommunications Carriers in India
General Images of Telecommunications Carriers in India  

Shares of Vodafone Idea fell by more than 23% on Friday after India's apex court ordered the country's second-largest telecom operator and Airtel, the third-largest telecom network, to arrange and pay billions of dollars in dues in a month.

In a strongly worded judgement, the Supreme Court rejected telecom networks' application to defer paying historic $13 billion levies to the government. "This is pure contempt, 100% contempt," Justice Arun Mishra told lawyers.

The order today, which may result in U.K. telecom giant Vodafone's local joint venture's collapse, saw Vodafone Idea's shares plunge by 23.21%. Vodafone Idea had more than 336 million subscribers as of November last year, according to official figures (PDF).

The company did not respond to a request for comment.

The Supreme Court's order was followed by direction from the Department of Telecoms to pay the dues by the end of Friday. The local ministry of telecommunications also ordered the telecom companies to keep their relevant offices open on Saturday to "facilitate" payments and answer queries.

In October, the Supreme Court ruled that Vodafone Idea and Bharti Airtel, as well as several other operators, including some that are no longer operational, will have to pay the government within 90 days a combined $13 billion in adjusted gross revenue as spectrum usage charges and license fees.

The Indian government and telecom operators have for a decade disputed how gross revenue should be calculated. The government has mandated the license and spectrum fee to be paid by operators as a share of their revenue. Telcos have argued that only core income accrued from use of spectrum should be considered for calculation of adjusted gross revenue.

Commenting on the ruling, Airtel said that it would pay $1.3 billion by next week and the remainder (about $5 billion) before March 17, when the Supreme Court hears the case again. Its shares rose 4.69% on Friday as the telecom operator is in a better position to pay and the prospects of it being only the second major telecom network to fight Reliance Jio, the top network run by India's richest man Mukesh Ambani .

In recent months, executives of U.K.-headquartered Vodafone, which owns 45% of Vodafone Idea, have said that the group's telecom business in India would "shut shop" if the government does not offer it any relief. Vodafone Idea, which is already saddled by $14 billion in net debt, owes about $4 billion in levies to the Indian government.

Vodafone Idea Chairman Kumar Mangalam Birla said in December that the firm is headed toward insolvency in the absence of a relief from the government. "It doesn't make sense to put good money after bad," he said then.

The last few years have been difficult for telecom operators in India, which arrived in the nation to secure a slice of the world's second most populous market. But since 2016, they have lost tens of millions of subscribers after Ambani launched Reliance Jio and offered free data and voice calls for an extended period of time, forcing every other company to slash their tariffs.

Sidharth Luthra, a senior advocate at Supreme Court, said in a televised interview that the court is within its rights to reach such a decision, but said that perhaps they should have considered the economic consequences of the ruling that would impact jobs, and could disrupt the everyday lives of people who rely on a network's services.

Vodafone Idea is the top trending topic on Twitter as of early Saturday (local time), as numerous people expressed concerns about the future prospects of the telecom network and worried if the service would remain operational for them.

COMMENTS

More Related News

UK
UK's Johnson out of intensive care as his condition improves
  • World
  • 2020-04-09 10:58:10Z

British Prime Minister Boris Johnson was moved out of intensive care Thursday at the London hospital where he is being treated for the new coronavirus, as his government told Britons to prepare for several more weeks in lockdown. Johnson's office said he was "moved this evening from intensive care back to the ward, where he will receive close monitoring during the early phase of his recovery." Earlier Thursday, Foreign Secretary Dominic Raab, who has been standing in for the prime minister during key meetings, said Johnson was "making positive steps forward."

Impossible dilemma? World watches Italy as businesses plead to return to work
Impossible dilemma? World watches Italy as businesses plead to return to work

Many Italian companies and academics are pressing the government to reopen factories to prevent an economic catastrophe, as the world watches how the first Western country to impose a lockdown can extricate itself from the unprecedented measures. The same debate is being held around the globe: how long

U.K. Virus Crisis Takes Dramatic Turn With Boris Johnson in Intensive Care
U.K. Virus Crisis Takes Dramatic Turn With Boris Johnson in Intensive Care

(Bloomberg) -- Boris Johnson's government faces a serious crisis at the worst possible time in the coronavirus outbreak, with the prime minister hospitalized and ministers under pressure to solve a medical equipment shortage just as Covid-19 infections approach their expected peak.The 55-year-old prime minister was taken to the hospital on Sunday night for routine tests after struggling to shake off the virus, but his condition worsened during Monday afternoon. The pound fell after the government announced he had been moved to a facility for the most seriously ill patients.The prime minister's deteriorating health intensifies the difficulties facing the country as it prepares for cases to...

India says it will ship hydroxychloroquine to U.S. after Trump threatens retaliation
India says it will ship hydroxychloroquine to U.S. after Trump threatens retaliation

India lifts a ban on exporting hydroxychloroquine, which Trump called a possible 'game changer' in the coronavirus fight despite a lack of evidence.

The US government has possibly millions of chickens in secret locations laying eggs year round for flu vaccines. The exact number and location are a matter of national security. Here
The US government has possibly millions of chickens in secret locations laying eggs year round for flu vaccines. The exact number and location are a matter of national security. Here's what we know about the chickens.

In the most recent flu season, 140 million eggs could have been used for vaccines. And hens only lay a single egg each day.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy