Vodafone Idea’s Ratings downgrades from BBB to BBB Minus

Vodafone Idea’s ratings has downgraded ₹3500-crore debt after the Supreme Court struck down the company’s review petition in the verdict on gross revenue case, the telecom operator said in an exchange filing late on Friday. The rating has been downgraded from BBB to BBB minus.

The company said “India Ratings and Research has downgraded its rating on non-convertible debentures of ₹3500 crore of erstwhile Vodafone Mobile Services Ltd (since merged with the company) as per the rating rationale uploaded on its website today. Vodafone India and Idea Cellular was merger in September 2018.

Vodafone Idea said “. The downgrade is on account of crystallisation of adjusted gross revenue related liabilities post the dismissal of the review petition by the Supreme Court, further saying “that the apex court has agreed to hear the telcom’s modification plea next week which seeks more time to pay these dues”. Meanwhile, the government will not take any action against mobile service providers that failed to meet the court-directed 23 January deadline to pay dues, after Vodafone Idea Ltd and Bharti Airtel Ltd asking for more time, the department of telecommunications said in an internal note dated 23 January.

The Supreme Court agreed to hear the pleas filed by Vodafone Idea, Bharti Airtel, and Tata Teleservices next week. The 24 October order, which upheld the government’s definition of revenue after a 14-year court battle with telecom companies, has strained the already precarious financial situation of Vodafone Idea and Bharti Airtel. Vodafone Idea owes more than ₹50,000 crore to DoT, while Bharti Airtel has to pay ₹35,586 crore. Tata Teleservices which sold its mobile services business to Airtel, has dues of ₹14,000 crore.

Vodafone Idea chairman Kumar Mangalam Birla had said that the company would have to shut  shop in the absence of relief from the government following the AGR verdict.