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The Indian telecoms crisis shows no sign of abating

The Indian government is showing no sign of backing down on its demands for massive payments from Bharti and Vodafone.

Bharti Airtel took an exceptional charge of around $4 billion on its latest quarterlies, to account for most of the bill presented to it by the Indian government for historical license fees. This follows a letter sent by the Indian Department of Telecoms demanding they pay up on timely fashion.

“On the AGR verdict of the Hon’ble Supreme Court, we continue to engage with the government and are evaluating various options available to us,” said Bharti Airtel boss Gopal Vittal in his comments on the quarterlies. “We are hopeful that the government will take a considerate view in this matter given the fragile state of the industry.” The charge indicates they’re not that hopeful.

Meanwhile Vodafone CEO Nick Read had a bit of a moan about the situation during his own earnings call earlier this week. This doesn’t seem to have gone down too well back in India, with government officials expressing their displeasure to the Indian media, according to the Standard. Read seems to have slightly retreated from his previous position, but not much. His underlying point that there is rapidly diminishing incentive to put up with all this aggro remains.

It looks like the best Voda and Bharti can hope for now is a bit of relief on the government bill, but they’re still going to have to shell out a lot of rupees. What this will mean for the future of the Indian telecoms market is unclear. Presumably Relaince Jio will be in a stronger position than ever to differentiate itself through network investment, which will surely have a negative effect on competition.


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