Franklin cuts Vodafone Idea’s debt exposure to zero on court snub

Bloomberg

Franklin Templeton Asset Management (India) Pvt marked down its debt exposure to Vodafone Group Plc’s India venture to zero, concerned by the operator having to pay $4 billion in back-fees as early as next week. The carrier’s shares suffered a record plunge.
The payment deadline has led to “significant uncertainty with respect to our exposure” to the carrier, the fund house said in a statement. Shares of Vodafone Idea tumbled as much as 39%, reflecting concerns over the future of the beleaguered company.
Local wireless operators including Vodafone Idea Ltd and Bharti Airtel Ltd suffered a blow, when the Supreme Court rejected their appeal against an October verdict requiring them to pay as much as $13 billion for spectrum and license fees. The companies were counting on some relief, such as a reversal of the earlier order, reduced liabilities or staggered payment.
The court’s rebuff adds to the woes of India’s debt funds hit by a lingering shadow banking crisis that’s shaken the nation’s credit markets in the past 18 months. The order also puts a severe burden on the survivors of a tariff war sparked by the 2016 entry of billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd, an upstart that disrupted the industry with free calls and cheap data.
Both Bharti Airtel and Vodafone Idea, with a combined net debt of about $30 billion, reported record losses in the September quarter.