Setback for Vodafone as Indian court asks telecom firms to pay £10bn

IN a fresh blow to the struggling Indian arm of Vodafone, country’s top court on Friday (14) ordered major telecom companies to pay $13 billion (£10bn) in the unpaid spectrum and licensing fees by March 17 or face punishment.

Vodafone Idea, a joint venture of Britain's Vodafone Group and India's Idea Cellular will have to stump up about $3.9bn.

The court ruling has come when the telecom firms in India are witnessing huge losses and struggling to return to their previous growth path.

Shares in Vodafone Idea, which said it would be hardest hit by the ruling, fell 23 per cent on Mumbai's Sensex Index exchange after the court's announcement.

Bharti Airtel and Reliance Jio- owned by Asia's richest man Mukesh Ambani were also hit by the order, which comes after the companies failed to obey an October ruling demanding payment of overdue levies within three months.

The court has threatened contempt proceedings against the companies and Department of Telecommunications government officials for non-compliance with that ruling.

The long-running row between the government and India's big telecoms has centred on how licence and other fees paid by the firms should be calculated.

Companies argue they should be based on income from only their telecoms business, while the court ruled they should be calculated on the amount earned from all business dealings, including handset sales and other income.

On Friday the companies asked the court for more time to pay, which Justice Arun Mishra described as "complete nonsense".

Airtel has to pay $3bn while Jio, which escaped with a lighter fee has already paid $1.8bn.

Bharti Airtel's shares rose almost five per cent, however.

Analysts said Airtel and Reliance Jio would benefit the most from any Vodafone Idea collapse, which could lead to the Indian market being dominated by two leading companies.