With just one week left for them to pay over Rs 88,600 crore in past dues, Bharti Airteland Vodafone Idea are left with last legal remedy of filing a curative petition but such petitions are rarely admitted by the Supreme Court, analysts said on Friday.
The Supreme Court on Thursday dismissed review petitions filed by telecom companies against its October 24, 2019 order that asked for inclusion of non-telecom revenues for calculating statutory dues such as license fee and spectrum usage charge.
Dues, which total to Rs 1.47 trillion for 15 telecom companies including Airtel and Vodafone Idea Ltd (VIL), as per the October order, have to be paid by January 23.
This January 23 deadline for payment may not apply to non-telecom companies which too have been asked to pay substantial amounts in past dues, Kotak Institutional Equities said in a note.
"From a legal standpoint, the only option available to the telcos now is a curative petition," it said.
The rules around curative petition are fairly tight as the petitioner has to establish that there was a genuine violation of principles of natural justice, it said adding the court can impose 'exemplary' costs to the petitioner if the plea lacks merit. "We note that curative petitions are rarely admitted." ICICI Securities said Bharti Airtel has already raised capital of $3 billion, which should help it meet the burden. "But the same remains a herculean challenge for VIL – a challenge that cannot be resolved without government intervention, in our view." Though Bharti Airtel and VIL can still file a curative petition, "the probability of resolution remains bleak," it said.
UBS Group said the ruling raises risks for lenders to the companies. "IndusInd, Yes Bank and SBI appears to have relatively high exposure to Vodafone Idea," it said.
The Supreme Court on Thursday dismissed review petitions filed by telecom companies against its October 24, 2019 order that asked for inclusion of non-telecom revenues for calculating statutory dues such as license fee and spectrum usage charge.
Dues, which total to Rs 1.47 trillion for 15 telecom companies including Airtel and Vodafone Idea Ltd (VIL), as per the October order, have to be paid by January 23.
This January 23 deadline for payment may not apply to non-telecom companies which too have been asked to pay substantial amounts in past dues, Kotak Institutional Equities said in a note.
"From a legal standpoint, the only option available to the telcos now is a curative petition," it said.
The rules around curative petition are fairly tight as the petitioner has to establish that there was a genuine violation of principles of natural justice, it said adding the court can impose 'exemplary' costs to the petitioner if the plea lacks merit. "We note that curative petitions are rarely admitted." ICICI Securities said Bharti Airtel has already raised capital of $3 billion, which should help it meet the burden. "But the same remains a herculean challenge for VIL – a challenge that cannot be resolved without government intervention, in our view." Though Bharti Airtel and VIL can still file a curative petition, "the probability of resolution remains bleak," it said.
UBS Group said the ruling raises risks for lenders to the companies. "IndusInd, Yes Bank and SBI appears to have relatively high exposure to Vodafone Idea," it said.
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