Vodafone Idea, Bharti Airtel shares in focus as Bombay HC quashes one-time spectrum levy

Shares of Vodafone Idea and Bharti Airtel Ltd are in focus on Tuesday morning after the Bombay High Court set aside the Centre's demands for one-time spectrum charges (OTSC) imposed on the two telecom operators. In a significant relief for the telecom operators, the HC also annulled all actions taken by authorities based on the disputed demands. This marked a major legal victory for the two companies after a long-running dispute with the Department of Telecommunications (DoT). Vodafone Idea shares are already up 18 per cent in the past one month. Bharti Airtel has gained 3.43 per cent during the same period. 

It was in the aftermath of the Supreme Court's 2012 cancellation of 122 telecom licences in the 2G spectrum case that the government sought to levy a one-time spectrum charge on telecom operators holding spectrum beyond prescribed limits. Under DoT rules, operators that held spectrum beyond 6.2 MHz in certain circles between 2008 and 2012 were required to pay a market-linked price for the excess airwaves. Similar provisions were later applied to holdings above 4.4 MHz from January 2013 until the expiry of their licences. 

Telecom companies challenged the levy, contending that the demands were imposed retrospectively and lacked legal backing under the licence regime in force at the time the spectrum was allocated. The dispute led to prolonged litigation involving telecom operators, the government and multiple judicial forums.

The Bombay High Court ruled that the government's demands for one-time spectrum charges were unsustainable and set aside the relevant orders, effectively removing the legal basis for the recoveries sought from telecom operators. Bharti Airtel had previously made provisions of over Rs 7,000 crore towards potential liabilities linked to the spectrum charge dispute, while Vodafone Idea had also recognised substantial provisions related to the matter. 

Brokerages such as MOFSL noted that tariff hikes now hold the key for telecom players such as Vodafone Idea Ltd and Bharti Airtel Ltd to deliver double-digit year-on-year (YoY) revenue growth in FY27, MOFSL said on Monday. MOFSL noted that more than 50 per cent of Reliance Jio’s subscribers have now opted for 5G and felt the free unlimited 5G offerings, which acted as a headwind to data monetisation, must stop. Telcom operators including Bharti Airtel, Rjio and Vodafone Idea are seen starting monetising higher data consumption on 5G. 

Vodafone Idea, meanwhile, informed stock exchanges about an order levying a financial disincentive of Rs 15,57,000/- by the Telecom Regulatory Authority of India under Telecom Commercial Communications Customer Preference Regulations, 2018. It was regarding the failure to implement and enforce scrubbing
mechanism and non-compliance of provisions relating to unsolicited commercial communication for the quarter ending September 2024 under Telecom Commercial Communications Customer Preference Regulations, 2018.

"The maximum financial impact is to the extent of disincentive levied. The company is reviewing the Order and evaluating the next steps in this matter," Vodafone Idea said.