India’s Supreme Court on Thursday dismissed a petition filed by telecom giants, including Vodafone Idea and Bharti Airtel, seeking a recalculation of the licence fees they owe to the government. The decision is the latest blow in a long-standing legal battle that has strained the financial health of Vodafone Idea and threatened its survival in a market dominated by Airtel and Reliance Jio.
Timeline of Key Events:
- 2019: India’s Supreme Court ruled that telecom companies must pay $13 billion in dues based on adjusted gross revenue (AGR), significantly increasing the amount owed to the government. Vodafone sought relief on $4 billion of its dues, while the industry warned of a potential crisis.
- 2020: The Supreme Court rejected a petition to review its 2019 decision. Telecom operators were ordered to pay their dues immediately, with a 10-year window granted to complete payments. Vodafone and Airtel hiked prices to manage the financial burden.
- 2021: Vodafone’s non-executive chairman, Kumar Mangalam Birla, resigned, causing its shares to plummet and raising fears about the company’s future. Banks, led by the State Bank of India, called on the government to extend the timeline for Vodafone’s dues. Days later, the government approved a relief package that included a four-year moratorium on payments.
- 2022: Vodafone agreed to convert a portion of its dues related to spectrum auctions into equity, with the government ordering a conversion of 161.33 billion rupees into shares.
- 2023: Telecom companies filed a fresh petition in September, requesting the Supreme Court to recalculate the dues.
- 2024: Vodafone launched a 180 billion rupee share sale to fund its 4G network expansion, establish 5G services, and settle its taxes and dues. The company also issued shares worth 24.58 billion rupees to Nokia and Ericsson to raise additional capital.
Industry Challenges Continue
The Supreme Court’s rejection adds further pressure to Vodafone Idea, which has been grappling with debt and limited cash flow amid fierce competition from Airtel and Reliance Jio. Vodafone’s efforts to raise funds through equity sales aim to stabilize its operations, but the looming financial obligations continue to pose significant risks to its future.
As India’s telecom sector remains under strain, industry experts are watching closely to see how Vodafone and other operators navigate the financial and regulatory challenges ahead.
