Indian telecom firms won some reprieve on Tuesday as the country’s top court gave the mobile carriers 10 years to settle government dues.
Vodafone Idea and rival Bharti Airtel, two of the three major carriers, had asked India’s Supreme Court for 15 years to settle their fees.
The Supreme Court ruling gave the firms time until 2031 to clear their dues, after they missed an original January deadline ordering them to pay roughly $13 billion.
The court also asked telecoms firms to pay 10% of the charges owed by March 31, 2021.
The dues refer to the amount that telecom providers must pay to the Department of Telecommunications (DoT) for using airwaves and in license fees.
Vodafone Idea – a joint venture between Britain’s Vodafone Group and India’s Idea Cellular said in its quarterly earnings statement on August 6 that if it is unable to pay its dues, that could jeopardise its ability to remain in business.
The ruling gives some respite to the loss-making company’s financial pressures.
Vodafone Idea’s shares plunged as much as 25% after the ruling before closing down 13.2%.
Vodafone Idea has paid the government INR₹ 78.54 billion in telecoms dues, according to regulatory filings, but still owes roughly INR₹ 500 billion to the government.
It reported its eighth straight quarterly loss in April-June with its gross debt, excluding lease liabilities, at INR₹ 1.19 trillion.
Vodafone’s customer base fell by 4.7 million to 309.9 million users in May, according to data from India’s telecoms regulator.
Separately, the company also owes hundreds of millions of dollars in payments for airwaves and interest on debt.
Bharti Airtel previously said it has paid all its dues which it estimates at 180 billion rupees, but government calculations suggest it still needs to pay another 259.76 billion rupees. Its shares closed 6.5% higher.
“For Bharti Airtel, the (view) that Vodafone Idea is being marginalized is beneficial for them,” said Vivekanand Subbaraman of research firm Ambit Capital.
India’s newest carrier Jio, controlled by India’s richest man Mukesh Ambani, has already cleared its smaller backlog of charges.
India’s telecom providers have to pay the DoT nearly 3-5% of their adjusted gross revenue (AGR) in usage charges for airwaves and 8% of AGR as licence fees. They have long disputed the definition of AGR but last year the Supreme Court upheld the DoT’s view that the AGR should include all revenue.