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(Updates to add company, lobby group comment)
By Sankalp Phartiyal and Suchitra Mohanty
NEW DELHI, Oct 24 (Reuters) - India's top court on Thursday
upheld a demand by the country's telecoms department that
wireless carriers pay 920 billion rupees ($12.97 billion) in
overdue levies and interest, sending their shares tumbling.
Telecom providers in India pay the Department of
Telecommunications (DoT) nearly 3-5% of their adjusted gross
revenue (AGR) in usage charges for spectrum or airwaves and 8%
of AGR as licence fees.
The DoT and the mobile carriers have been at odds over the
definition of AGR. The companies argue that AGR should comprise
just revenue accrued from core services, while the DoT says AGR
should include all revenue.
After the court decision, shares in Bharti Airtel
dropped as much as 9.7%, while Vodafone Idea fell as
much as 23%.
Bharti Airtel and Vodafone Idea expressed their
disappointment at the order.
"This decision has come at a time when the (telecoms) sector
is facing severe financial stress and may further weaken the
viability of the sector as a whole," Airtel said in a statement.
The company also said New Delhi needed to find a way to reduce
the burden on the industry.
Vodafone Idea said the judgment was damaging for India's
telecom industry, which was already under financial strain.
"Today’s order has huge impact on two private operators
while most of the other impacted operators have exited the
sector," the company said. Vodafone Idea and Bharti Airtel are
the two private operators.
Reliance Industries' telecoms venture Jio Infocomm began
operations in late 2016 and has a smaller backlog of charges to
clear.
The local telecoms lobby group, the Cellular Operators
Association of India, said taxes and levies in the country were
already among the highest in the world and that it was uncertain
whether the sector would be able to recover from this setback.
India's crowded telecoms sector once had more than a dozen
mobile operators but operating costs and their own
inefficiencies has led to consolidation.
The launch of telecoms services by Jio with free voice and
cut-price data pushed rivals to match prices, a factor that
weighed on profitability.
Currently, India's has three major mobile operators and two
state-owned loss making carriers.
($1 = 70.9430 Indian rupees)
(Reporting by Sankalp Phartiyal; Editing by Sanjeev Miglani and
Jane Merriman)
