The telecom tremors: Consequences of Supreme Court's ruling

WION New Delhi, India Feb 17, 2020, 11.07 PM(IST)

Image for representation. Photograph:( Reuters )

Story highlights

Two top telecom companies must pay up a total of 85,000 crore rupees in dues to the government. The apex court's order will have severe economic consequences.

The Indian telecom industry is under duress after the Supreme Court came down heavily on telecom companies for not paying dues on time to the government.

The judges accused the telcos of "contempt of court". Even the telecom department officials were rebuked.

Now, three telecom companies must pay a very heavy bill together worth Rupees one lakh crore. 

Here's all you need to know about the consequences of the ruling: 

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The telecom industry is reeling under the slam of the Supreme Court's gavel. Two top telecom companies must pay up a total of 85,000 crore rupees in dues to the government. The order will have severe economic consequences.

Vodafone Idea could shut down, causing over 13,000 people to lose their jobs. The number could be higher if we include all those who run "recharge shops" across the country. Plus, the mobile bill of customers may shoot up. 

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Consumers may have to pay substantially more for their mobile data packs and voice calls because of the stress.

The top court had set a January 23 as the deadline. It has pulled up the government for not enforcing the deadline.

Another telecom giant, Bharti Airtel, owes Rupees 35,000 crore, while Vodafone Idea owes over 50,000 crores. 

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The companies must pay the sum by March 17. 

The telecom giants have paid some of the money and have sought more time for the rest.

But why do these companies have to pay such massive dues? 

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The legal conflict is around 14 years old. The dispute is over the definition of revenue. The worst-hit is Vodafone Idea which is saddled with mounting losses and debt and owes the biggest chunk to the government. The company says it will collapse if the government does not give any relief.

The collapse of Vodafone Idea would make it the third bankruptcy of a local mobile carrier in two years after that of Aircel and Rcom.

It all started with the arrival of Mukesh Ambani's Reliance Jio, which slashed the existing mobile data prices to an extent that India today offers the world's cheapest mobile data packs.

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Once Jio did it, others had to follow thus dipping their hands to the bottom of their coffers to stay competitive.

Meanwhile, data-hungry Indian consumers became more demanding, pushing the companies into a data war. 

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The Supreme Court ruling will change all this. 

In order to pay the dues, telecom operators could raise the tariffs by 25 to 30 per cent by the end of the year. 
 
So, young India will now begin to feel the pinch, as they begin to shell out more for less data.