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By Aftab Ahmed
NEW DELHI (Reuters) – Vodafone Idea Ltd said on Saturday it was assessing how much it would pay the Indian government as part of dues owed and said it proposed making a payment in the next few days.
India ordered mobile carriers on Friday to immediately pay billions of dollars in dues after the Supreme Court threatened the companies and officials with contempt proceedings for failing to implement an earlier ruling.
The move threatens the survival of Vodafone Idea, a joint venture between Britain’s Vodafone Group (LON:) Plc and India’s Idea Cellular, as the unit is saddled with about $3.9 billion in overdue payments.
“The Company is currently assessing the amount that it will be able to pay to DoT (Department of Telecommunications) toward the dues calculated,” Vodafone said in a statement. “The Company proposes to pay the amount so assessed in the next few days.”
Vodafone did not give details of the amount it was likely to pay. A company spokesman declined to provide details on funding for the payment.
Underscoring its vulnerability, the company said its ability to continue essentially hinged on the Supreme Court granting it permission to discuss issues like timelines for payments with the government.
Analysts have increasingly called into doubt the viability of Vodafone Idea. Vodafone Group has said it has no plans to commit any more equity into India and the Indian telco has clocked losses in the last six quarters due to intense competition.
“Recent developments raise serious concerns about Vodafone Idea’s survival,” Rajiv Sharma, analyst with SBI Cap Securities, said in a note on Friday.
Some analysts predict that India’s large market will likely have only two telecom players – Airtel and Reliance Jio, which is backed by Asia’s richest man, Mukesh Ambani – if the government does not intervene to provide some relief.
“We believe this makes duopoly almost certain in the absence of government intervention. Chances of government intervention are slim, but it cannot be ruled out,” Pranav Kshatriya of Edelweiss said.
Bharti Airtel said on Friday it would pay 100 billion rupees to the government by Thursday, while it would pay the rest before the next Supreme Court hearing on March 17.
“We see this event as a net positive for Bharti Airtel (Bharti) as although it will have to pay 356 billion rupees toward liabilities, the decimation of (a) weak operator will significantly enhance its market share,” Kshatriya said.
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