India’s prime court docket on Thursday rejected a request by telecom firms to recalculate the dues they owed the federal government, sending shares of debt-saddled Vodafone Concept and its friends down.
Analysts at ICRA estimate that Vodafone Concept and Bharti Airtel owe 1 trillion rupees ($12 billion) in previous dues, together with spectrum expenses and licensing charges. They, nevertheless, didn’t make clear the quantity owed by different firms.
The businesses, in a last-resort petition in opposition to an identical ruling by the highest court docket in 2021, had argued that the telecom division made errors in calculating the so-called adjusted gross income (AGR) dues.
Telecom corporations had lengthy contested that solely income accrued from core providers needs to be taken into consideration when computing the dues, whereas the federal government argued that AGR ought to embrace non-core income as effectively, reminiscent of cash from hire or land gross sales.
The Supreme Court docket had, in 2019, dominated in favour of the federal government’s definition of AGR calculations.
The most recent ruling is a setback for Vodafone Concept, which owes the federal government round 700 billion rupees in license charges and spectrum expenses, in accordance with its newest quarterly report.
The Indian authorities can be one of many largest shareholders within the firm with a 23.1% stake.
Analysts didn’t count on the ruling to have a serious influence on Bharti Airtel as a result of its stronger financials.
Shares of Vodafone Concept slumped about 20% after the information, whereas Bharti Airtel briefly turned adverse, however closed 0.6% greater.
“A optimistic ruling would have lowered Vodafone’s debt by 350 billion rupees,” mentioned Balaji Subramanian, a analysis analyst at IIFL Securities.
The ruling makes Vodafone’s debt-funding (250 bln rupee) difficult since lesser money circulate would fear banks about taking publicity to the corporate, he mentioned.
“If the aid had come, their annual money circulate can be greater by 80 billion rupees.”
Vodafone Concept and Bharti Airtel didn’t instantly reply to Reuters’ requests for remark.
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