Vodafone's India operation on brink of bankruptcy after court rulingby Michael Searles
India’s Supreme Court has rejected an application to delay the payment of billions of dollars in backdated taxes and penalties from telecoms firms in a ruling that threatens to put Vodafone’s operation in the region out of business.
Vodafone Idea and fellow telecom company Bharti Airtel, have been ordered to pay the Indian government $13bn by 17 March, the court said on Friday
It makes the prospect of delaying the $7bn owed by Vodafone Idea more challenging.
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Its local partner had previously the sum could cause it to “shut shop”.
Vodafone Idea’s bankruptcy would turn India’s telecoms market into a two-firm battle between Airtel and Reliance Jio.
It would represent a setback for Prime Minister Narendra Modi, who has promised to make India a $5tn economy by 2025. The economy is on course to slow for a third consecutive year.
Vodafone Idea’s shares plunged by as much as 19 per cent after the ruling on Friday.
Bharti Airtel saw gains of five per cent. The firm would likely collect the customers of its biggest rival should it collapse.
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Vodafone Idea also reported a third-quarter loss on Thursday as it lost millions of customers due to the ongoing price war in India.
The company is “under incredible strain”, said Vodafone group chief executive Nick Read earlier this month.
City A.M. has reached out to Vodafone Idea for comment.