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Supreme Court orders telcos to clear dues by March 17, threatens contempt

By Ritu,

Capital Sands

India’s Supreme Court slammed mobile carriers on Friday for non-payment of billions of dollars in government dues and threatened them with contempt proceedings if they didn’t pay up by March 17.

The court, which had asked companies including Vodafone Idea and Bharti Airtel to pay 920 billion Indian rupees ($12.89 billion) in overdue levies and interest by Jan. 23, had rejected petitions seeking a review of its order last month.

“This is pure contempt, 100% contempt,” judge Arun Mishra told lawyers for the companies and the government on Friday.

The trio of Vodafone Idea, Bharti Airtel and Reliance Jio, which is backed by Asia’s richest man, Mukesh Ambani, controls more than 90% of India’s mobile market. Airtel and Vodafone have both flagged going concern risks following the order.

The move threatens the survival of Vodafone Idea, a joint venture of Britain’s Vodafone Group Plc and India’s Idea Cellular, as the unit is saddled with about $3.9 billion in overdue payments.

The Supreme Court on Friday said the companies and the federal Department of Telecommunications  were liable for contempt of court.

Vodafone Idea, which owes the government about $4 billion, saw its shares fall as much as 19% after Friday’s ruling. The company had lost about 27% of its value this year at Thursday’s close after falling 73% in 2019.

The broader Indian stock market also reversed early gains to trade lower after the ruling as investors were worried about its strain on already over-exposed banks. The broader NSE Nifty 50 index was down 0.15% during mid-day’s trading.

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