Indian $14bn telco dispute with government reaches brink

Indian $14bn telco dispute with government reaches brink this week

17 February 2020 | Alan Burkitt-Gray

Cover

India’s mobile operators have told the government they will make a part-payment of the $14 billion today that they owe in dues.

Bharti Airtel, Tata Teleservices – which is merging with Bharti Airtel – and Vodafone Idea have all said they will be making part-payments of what is due after they lost a case in India’s Supreme Court in January.

The government’s Department of Telecom (DoT) is threatening to take action if they fail the pay the full one trillion rupees that they owe. On the other hand, operators have threatened to close down if the government demands the full sum.

The DoT last year changed the definition of adjusted gross revenue (AGR), on which dues are calculated, leaving Bharti Airtel, Vodafone Idea and Tata Teleservices facing the extra payments in licence fees, spectrum usage charges, penalties and interest.

Bharti Airtel asked on Friday for an extension until Thursday 20 February, but the DoT said no.

Vodafone Idea said at the weekend that it would make a payment this week, but had not decided how much. It will decide “in the next few days” the company told Indian business media.

According to Reuters this morning, Vodafone Idea is now saying it will pay the equivalent of $490 million by Friday. The agency cited a lawyer for the company, speaking to it today. “The company lawyer declined to be named as the matter is still in court,” said Reuters.

An official told the Press Trust of India: “Airtel, Vodafone Idea and Tata Teleservices have said that they will make payments on Monday. DoT will take action after evaluating the amount paid by them.”

Vodafone Idea has made losses in each of the last six quarters and UK-based Vodafone group appears unwilling to keep the company funded.

Nitin Soni of Fitch Ratings wrote in today’s Times of India that Vodafone Idea is “already struggling to service some of the existing debt on the balance sheet. It is very unlikely that the company will be able to raise debt funds to pay this large amount of AGR dues.”

According to reports at the weekend, the Supreme Court is demanding that CEOs and directors of the companies appear before it in person one month today, on 17 March.