India’s high courtroom on Thursday rejected a request by telecom corporations to recalculate the dues they owed the federal government, sending shares of debt-saddled Vodafone Idea and its friends down.
Analysts at ICRA estimate that Vodafone Idea and Bharti Airtel owe 1 trillion rupees ($12 billion) in previous dues, together with spectrum fees and licensing charges. They, nevertheless, didn’t make clear the quantity owed by different corporations.
The corporations, in a last-resort petition in opposition to the same ruling by the highest courtroom 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 under consideration when computing the dues, whereas the federal government argued that AGR ought to embody non-core income as nicely, comparable to cash from hire or land gross sales.
The Supreme Court had, in 2019, dominated in favour of the federal government’s definition of AGR calculations.
The newest ruling is a setback for Vodafone Idea, which owes the federal government round 700 billion rupees in license charges and spectrum fees, in response to its newest quarterly report.
The Indian authorities can also be one of many largest shareholders within the firm with a 23.1% stake.
Analysts didn’t anticipate the ruling to have a serious impression on Bharti Airtel as a result of its stronger financials.
Shares of Vodafone Idea slumped about 20% after the information, whereas Bharti Airtel briefly turned unfavorable, however closed 0.6% greater.
“A constructive ruling would have diminished 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 move would fear banks about taking publicity to the corporate, he mentioned.
“If the reduction had come, their annual money move can be greater by 80 billion rupees.”
Vodafone Idea and Bharti Airtel didn’t instantly reply to Reuters’ requests for remark.
© Thomson Reuters 2024
(This story has not been edited by NDTV employees and is auto-generated from a syndicated feed.)
