India’s Supreme Court dismisses $13bn telecoms payment deal as ‘sheer contempt’
India’s Supreme Court is in a battle with the government over a $13 billion decision that may see the demise of mobile operator Vodafone Idea.
The government this week said that the country’s operators could pay their dues, recalculated last year and due early this year, over 20 years.
But the Supreme Court yesterday ruled this out, with judge Arun Mishra (pictured) saying this was unreasonable. The court used the term “sheer contempt” of the government’s struggle to keep the operators running.
Vodafone Idea, a joint venture between UK-based Vodafone group and an Indian business chain, Aditya Birla, is most threatened by the move to extract $13 billion from the industry after the government’s Department of Telecommunications (DoT) recalculated spectrum and other charges in 2019 in a move termed Adjusted Gross Revenue (AGR).
Bernstein, an analyst company, issued a research report today which said of Vodafone Idea: “We do not see how they can meet the demands of the court and are, therefore, in threat of insolvency.” Vodafone Idea is not commenting.
The DoT has looked at how the numbers of Vodafone Idea’s 300 million users could be ported to other operators, including Bharti Airtel and Reliance Jio, but – according to earlier reports – it has concluded that this task is beyond the technology.
However, the Supreme Court has decided to put the matter on hold for two weeks and to let the government’s solicitor general negotiate.
Jio has paid up in full – but a smaller amount than the other two large operators as it has been in business only four years. Airtel assessed its due as half what the DoT originally demanded and now says it has paid what it needs.
But Vodafone Idea faces closure if the Supreme Court demands it pay the full $4 billion due under its AGR calculation.