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Indian Supreme Court Orders Telecom Firms To Pay USD13 Billion

Fri, 14th Feb 2020 12:41

(Alliance News) - India's Supreme Court on Friday ordered top telecom companies to pay USD13 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 said it would be hardest hit by the ruling, fell 23% 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.  

Vodafone Idea, a joint venture of London-listed Vodafone Group PLC and India's Idea Cellular will have to stump up about USD3.9 billion.

Airtel has to pay USD3 billion while Jio, which escaped with a lighter fee has already paid USD1.8 billion.

The court has threatened contempt proceedings against the companies and 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's "survival is in jeopardy as there is no support either from the government or the parent company," Baburajan Kizhakedath, editor of TelecomLead.com, told AFP.

"They have no funds or capacity to service existing customers." 

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

Bharti Airtel's shares rose almost five percent however.

Analysts said 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.

FTSE 250-listed Airtel Africa PLC is a subsidiary of Bharti Airtel.

Baburajan said 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 USD1.8 billion bill. 

source: AFP

Copyright 2020 Alliance News Limited. All Rights Reserved.

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