Vodafone Idea at risk as court rejects plea

Bloomberg

India’s top court rejected a plea by mobile carriers seeking more time to settle billions of dollars in back-fees and began contempt proceedings against the companies, threatening to push Vodafone Group Plc’s beleaguered local venture to the brink weeks after it warned of a potential collapse.
The Supreme Court’s three-judge panel, headed by Arun Mishra, said that operators including Vodafone Idea Ltd and Bharti Airtel Ltd — owing a total of $13 billion in back-fees for spectrum and licenses — must deposit the dues by March 17. The companies’ shares plunged.
In its October verdict, the top court upheld the way the government calculated fees using a formula disputed by the companies, and in January, it rejected their petition to reconsider the order. But it had agreed to hear their plea to extend the schedule from the original due date of January 24.
The latest setback now leaves few options for Vodafone Idea, which needs to pay $4 billion, the highest among its peers, even as it struggles to stem record losses and rein in net debt that has ballooned to $14 billion. Highlighting its dire finances, Chairman Kumar Mangalam Birla said in December that the firm may be headed toward insolvency in the absence of any relief.
With UK-based Vodafone having signalled it isn’t likely to plow any more money into the venture in which it holds 45%, it falls on the Indian partner and billionaire Birla to chart a future course for the teetering operator. A collapse of the nation’s second-biggest wireless operator and the accompanying job losses would be another embarrassment for Prime Minister Narendra Modi, who rode to power promising employment opportunities for the country’s youth.
Vodafone Idea’s woes highlight the struggle Indian telecommunications companies have faced in a market plagued by high spectrum and license fees, frequent policy flip-flops and endless tax demands.