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Expectedly the Supreme Court has turned down pleas by some telcos to recalculate their adjusted gross revenue-related dues. Vodafone Idea, Bharti Airtel and Tata Teleservices, had cited errors in computation by the telecom department in their plea to the top court. However, it had always seemed a futile bid, particularly after the earlier order rejecting the self-assessment by the three.

While the fate of Tata Teleservices had already been sealed long before the case went to court, Bharti Airtel should be able to take the blow in its stride. The attention now is on the viability of Vodafone Idea’s business in India. Crippled by a debt burden of 1.8 trillion, the dismissal by the court couldn’t have come at the worst time for the stricken telco. Just last month, it had asked its lenders to give up their first charge on its collateral with the banks so that it could raise desperately needed funds. Vodafone Idea was hoping that the 15,000 crore in foreign investment it was planning to raise coupled with some relief from the highest court would offer some succour. But, unfortunately, it has instead had the door shut firmly in its face.

It now faces the prospect of coughing up 47,000 crore in adjusted gross revenue dues payable in instalments over the next 10 years. However, with its net debt at 10 times its operating profits (as per Yes Securities) and its average revenue per user (ARPU) at 107, the lowest among the three incumbents, it does appear to be an uphill struggle for the company.

It is telling that even as Vodafone Idea’s stock price crashed as much as 10% after the court order, that of its rival Bharti Airtel, also affected by the same ruling, recovered after a brief fall. Clearly, in the markets’ estimation, Vodafone Idea’s loss will be Bharti’s gain to a degree where it will mitigate the latter’s fallout from the additional burden.

Vodafone Idea had already stated in court that the only way it can service the additional dues is by earning them from its business. For that, it will first have to stay solvent and raise its ARPU, both a tall order.

Looking askance at the developments will be the clutch of banks—State Bank of India, Yes Bank, Indusind Bank and IDFC First among them—who could be left holding the baby if Vodafone Idea decides it has had enough of fighting capricious regulators and a government that seems comfortable with the idea of a duopoly in a key sector. While SBI’s lending of 11,000 crore will constitute a small exposure in its books, for Yes Bank and IDFC First, the exposure is significant.

Yet, their potential losses pale compared to what the Indian customer stands to lose if her choice of service providers is eventually limited to two.

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