Vodafone Idea has received another downgrade in its credit ratings, after saying it will be forced to pay billions in outstanding regulatory fees in the coming days. The rating with the CARE agency was cut to BB- with a negative outlook from BBB-.
In a statement to the stock market, Vodafone said it received notification from the Department of Telecom to pay immediately the revenue-based fees ordered by the Supreme Court last October. This follows the deadline of 23 January passing without action. The mobile operators' latest court appeal against the ruling was rejected on 14 February.
Vodafone said it aims to make partial payment this week, first of INT 25 billion and then another INR 10 billion by the end of the week. The board is looking at how further payments can be made.
The company warned at its latest quarterly report last week that its ability to continue as a going concern could be threatened by the payments, which add to INR 64.5 billion in losses in the December quarter.
The next court appeal against the Supreme Court order will be heard on 17 March. An urgent application to the Supreme Court asking it to prevent the DoT from taking action to recover the fees was not accepted.
Bharti Airtel said in a statement that it paid a deposit of INR 10 billion to the Department of Telecom following the latest court ruling. The company said it will pay the remainder after calculating the amount due across its operations and before the next court hearing.
The outstanding fees are a share of adjusted gross revenues generated by the operators. The court ruled in October on a long-running debate over how the AGR is defined, resulting in the operators owing additional amounts going back several years. Both Airtel and Vodafone Idea have held rights issues in order to help pay for the court ruling.
