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Shares of Vodafone's India venture rise on hopes of dues clearance
BENGALURU (Reuters) - Shares of loss-making Vodafone Idea (VODA.NS) rose as much as 12%, after media said the distressed Indian telecom operator would pay some of its staggering government dues of $3.9 billion on Monday, to avoid violating court orders.
On Friday, India ordered mobile carriers to immediately pay nearly $13 billion in dues after the Supreme Court threatened the companies and officials with contempt for failing to implement an earlier ruling.
On Saturday, the local arm of British telecom giant Vodafone Plc (VOD.L) said it proposed making a payment in the next few days.
The shares of the company, which fell more than 24% percent after Friday’s ruling, recovered on Monday to trade up 15% by mid-morning.
“While there is a concern that Vodafone is against the wall, there is a slim hope that they will get through,” said Siddhartha Khemka, head of research at Motilal Oswal Financial Services in Mumbai.
“The Supreme Court’s major contention was that there was no intent by telcos to pay the dues,” he added. “It was after that the company made a self-assessment and made an announcement on Saturday and we had the reports later.”
The media said here Vodafone Idea would pay off part of the dues owed in licensing and spectrum fees on Monday.
The company and the Department of Telecommunications(DoT) did not immediately respond to emails seeking comment.
Rival Bharti Airtel Ltd (BRTI.NS) said on Monday it had made a payment of 100 billion rupees toward the dues.
If Vodafone Idea shuts shop, the market would shape as a duopoly of rivals Airtel and Reliance Jio, which many analysts and executives see as bad for the industry.
Vodafone Idea has said before that its ability to continue as a profitable business was contingent on the Supreme Court allowing it to discuss issues such as payment timelines with the government.
“Given the government’s keenness on maintaining three private telcos, we believe the Department of Telecommunications or the government will request the Supreme Court to negotiate AGR payments with telcos,” said analyst Vivekanand Subbaraman of research firm Ambit Capital.
Reporting by Derek Francis and Nivedita Bhattacharjee in Bengaluru; Editing by Clarence Fernandez
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