The judgement saw Vodafone Idea record the biggest quarterly loss in Indian corporate history last week.
India has granted the country’s beleaguered telecom giants a moratorium on spectrum payments until the end of March 2022, offering much-needed respite after the Supreme Court slapped a massive $13-billion bill on the companies.
Vodafone Idea and Bharti Airtel bore the brunt of last month’s court ruling ordering firms to pay a combined 920 billion rupees in past spectrum and licensing fees.
The judgement saw Vodafone Idea record the biggest quarterly loss in Indian corporate history last week after it factored in the $4 billion levy.
But New Delhi offered a measure of relief to the struggling sector late on Wednesday, with the cabinet approving a moratorium on spectrum payments for the next two financial years.
“Deferment of spectrum auction instalments will ease the cash outflow of the stressed (telecom providers) and facilitate payment of statutory liabilities and interest on bank loans,” the cabinet said in a press release.
Vodafone Idea and Bharti Airtel, which was hit with a $3-billion bill, have warned that the ruling will exacerbate the telecom sector’s financial woes.
The announcement didn’t appear to do much to help the share price of either firm, with Bharti Airtel down two percent and Vodafone Idea losing four percent on Thursday morning in Mumbai.
In addition to seeking the deferral of payments, the British parent company Vodafone had also asked for a reduction in licensing fees.
Vodafone’s chief executive Nick Read said last week that the telecom firm was facing a crisis in India and would not invest any more equity in the country since the South Asian market contributed zero to its global share valuations.
Vodafone Idea and Bharti Airtel have both struggled since India’s richest man Mukesh Ambani launched Reliance Jio in 2016. The new mobile operator has offered dirt-cheap internet and free calls.
All three companies have announced plans to raise their charges in the next few weeks in a bid to boost their bottomline and help the sector recover after years of cut-price tariffs.
Many players have exited the sector in recent years or have gone bankrupt trying to compete with Jio, which was the only beneficiary of the October court verdict, escaping with a relatively light $1.8 billion in fees.
Global rating agency Fitch said that a high price tag of $70 million per megahertz (Mhz) is a big deterrent for telecoms in India like Bharti Airtel and Vodafone Idea to bid for 5G spectrum auction.
Protesters on Monday gathered outside the Supreme Court complex demanding an independent probe into the sexual harassment allegation raised against Chief Justice of India Ranjan Gogoi.
A former court assistant accused chief justice Ranjan Gogoi of having made unwanted sexual advances last year, the most high-profile case in a wave of sexual harassment accusations after a #metoo movement swept the country.
The UAE on Thursday sent a plane carrying 52 metric tons of food supplies to support Ukrainian refugees in the Republic of Bulgaria as part of the continuous relief provided by the UAE.
In a circular, the authority said that work for all federal ministries and entities will resume on Tuesday, 12th July.
The Ministry of Presidential Affairs shall provide the necessary support to the federal and local government agencies to implement the provisions of this resolution and the decisions required in this regard.