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    Voda Idea plunges 25%, Airtel jumps 4% after SC draws contempt against telcos, DoT officials

    Synopsis

    The apex court asked the telcos to deposit their dues by March 17.

    SC orders telecos to clear AGR dues by March 17

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    Shares of telecom companies reversed gains after the Supreme Court on Friday drew contempt against them and government officials for not complying with its order to pay AGR dues by January 23.

    The apex court asked the telcos to deposit their dues by March 17, ET NOW reported quoting agencies.

    In a hearing on the plea by telcos to provide more time to pay their AGR dues, the court said it will take action against all those who haven’t complied with its orders.

    Justice Arun Mishra observed that not even a penny has been deposited by the telecom companies, flouting the orders.

    Suman Chowdhury, President, Ratings at Acuité Ratings & Research said, "The SC order directing the telecom companies to settle the pending AGR dues by March 17, 2020 puts further uncertainty on their operational sustainability, particularly that of Vodafone Idea. The latter’s ability to pay an amount of over Rs 55,000 crore by the stipulated date is uncertain given its current financial flexibility. While Airtel needs to pay an amount of Rs, 35,500 crore, they have been able to raise funds in the recent past."

    Acuité expects telecom tariffs to rise further by at least 20 per cent-25 per cent in the near to medium term to support the payments of such large dues to DoT.

    Fifteen telcos need to pay over Rs 1.47 lakh crore to the government, comprising license fees, spectrum usage charge, interest and penalties.

    The apex court refused to defer hearing despite a request by the Solicitor General of India.

    The telcos were hoping that being allowed to discuss modalities of payment with DoT will offer scope to spread the dues over several years, thus softening the financial impact.

    Shares of telecom companies fell following the scolding by the court. Vodafone Idea tanked 17.41 per cent to Rs 3.70, Bharti Infratel 5.47 per cent to Rs 231.75 and Reliance Communications 4.11 per cent to Rs 0.70.

    Aksh Optifibre (down 3.88 per cent), GTL Infrastructure (down 2.63 per cent), Optiemus Infracom (down 1.1 per cent), Sterlite Technologies (down 0.39 per cent), Bharti Airtel (down 0.28 per cent) and GTPL Hathway (down 0.22 per cent) were other top telecom losers.

    The S&P BSE Telecom index was trading 0.85 per cent down at 1236.77 around 11:06 am.

    Shares of banks, which have huge exposure to telecom firms, also plunged following SC’s order. Nifty Bank was down 1.07 per cent at 30,776. IndusInd Bank was down 2.19 per cent at Rs 1,203 while IDFC First Bank dipped 1.71 per cent to Rs 40.20.

    Barring YES Bank, all constituent of the index were in the red.
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    12 Comments on this Story

    Anoop Aggarwal291 days ago
    What is the problem in selling LIC?
    Toad Pole291 days ago
    We should rename India to Relianstan. Mukesh Ambani can be our PM. Close all companies not owned by him directly or indirectly. Sad. Forgive them, Vodafone and Airtel, for they know not what they do.
    Varun Parakh291 days ago
    They will sell this Country.. LIC is sold.. One day they may bring IPO of RBI as well..
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