TMT
By
Supreme Court upholds govt demand for nearly $13 bn of dues from mobile operators
Photo Credit: VCCircle

India’s top court on Thursday upheld a demand by the country’s telecoms department that wireless carriers pay 920 billion rupees ($12.97 billion) in overdue levies and interest, sending their shares tumbling.

Telecom providers in India pay the Department of Telecommunications (DoT) nearly 3-5% of their adjusted gross revenue (AGR) in usage charges for spectrum or airwaves and 8% of AGR as licence fees.

The DoT and the mobile carriers have been at odds over the definition of AGR. The companies argue that AGR should comprise just revenue accrued from core services, while the DoT says AGR should include all revenue.

After the court decision, shares in Bharti Airtel dropped as much as 9.7%, while Vodafone Idea fell as much as 23%.

Bharti Airtel expressed its disappointment at the order.

“This decision has come at a time when the (telecoms) sector is facing severe financial stress and may further weaken the viability of the sector as a whole,” Airtel said in a statement. The company also said New Delhi needed to find a way to reduce the burden on the industry.

Vodafone Idea did not immediately respond to requests for comment.

India’s crowded telecoms sector once had more than a dozen mobile operators but operating costs and their own inefficiencies has led to consolidation.

The launch of telecoms services by Reliance Industries’ Jio Infocomm with free voice and cut-price data in 2016 pushed rivals to match prices, a factor that weighed on profitability.

Currently, India’s has three major operators and two state-owned loss making carriers.

Leave Your Comment(s)