India’s top court rejects telecom firms’ plea on dues

NEW DELHI: India’s top court rejected on Friday a plea by mobile carriers seeking corrections of what they called errors in the government’s calculation of their dues, leading to a slump in the shares of embattled Vodafone Idea.

Last year, the Supreme Court gave telecoms companies 10 years until 2031 to clear dues owed to the government for use of the airwaves and as licence fees, after they missed a January deadline to pay roughly $13 billion.

Friday’s ruling is a setback to Bharti Airtel and Vodafone Idea, which had approached the Supreme Court again this year, urging a re-calculation, but will have greater impact on heavily-indebted Vodafone Idea.

Bharti Airtel and Vodafone Idea did not respond to requests for comment.

After the ruling, shares of Vodafone Idea fell as much as 14.6 per cent to their lowest since October, while Bharti lost as much as 2.6 per cent before reversing course.

Friday’s decision does not “bode well for the recovery in the sector,” ratings agency ICRA said in a note, adding that elevated debt levels and very low tariffs were likely to lengthen the process.

Vodafone Idea’s net debt, at 1.8 trillion rupees was “high”, standing at 10 times its operating profit for the year to March 31, calculations by brokerage Yes Securities show.

It is also losing subscribers at a time of talks with potential investors to raise funds in a market disrupted by Reliance Industries’ Jio telecoms venture launched in late 2016.