Airtel stock is getting knocked down as investors fear it may have to pay Videocon's dues
- India's second largest telecom operator by subscribers had bought spectrum from the now bankrupt Videocon for about ₹4,400 crore four years ago.
- Since then, the
Supreme Courthas ordered that companies that own spectrum will have to pay levies not just on their revenue from telecom operations but on the entire company's revenue.
- Companies like Airtel and Vodafone are now battling a case in the Supreme Court seeking time to cough up a cumulative sum of ₹1.4 lakh crore.
AdvertisementAirtel, India's second largest telecom operator by subscribers, had bought spectrum from the now bankrupt Videocon in six circles for about ₹4,400 crore four years ago. Investors fear the deal may prove a lot costlier after a bench of Supreme Court judges reportedly observed that the Sunil Mittal-owned company may have to cough up dues owed to the government by Videocon too.
The fears have dragged Airtel shares down on Monday (Aug 23) by a little less than 2%, taking the one-month tally to a fall of nearly 10%.
Since the deal between Airtel and Videocon, the Supreme Court has ordered that companies that own spectrum will have to pay levies not just on their revenue from telecom operations but on the entire company's revenue.
Companies like Airtel and Vodafone are now battling a case in the Supreme Court seeking time to cough up a cumulative sum of ₹1.4 lakh crore (nearly $20 billion).
It's not just Airtel, the Supreme Court has made a similar observation for Reliance Jio, India's largest mobile service provider owned by Asia's richest man Mukesh Ambani, which had bought spectrum from the now bankrupt Reliance Communications, which owned by his younger brother Anil Ambani.
The court has asked the Department of Telecom (DoT) to file details of spectrum shared by insolvent companies, dues that arose on account of shared spectrum, and if relevant dues have been paid. Shareholders of Airtel and Reliance Industries (which is the holding company for Jio) wait anxiously.
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