Vodafone Group Plc’s India venture plunged by a record on prospects of having to pay the government $4 billion in back-fees as early as next week, highlighting concerns over the future of the beleaguered mobile carrier.

Local wireless operators including Vodafone Idea Ltd and Bharti Airtel Ltd suffered a blow on Thursday, when the Supreme Court rejected their appeal against an October verdict, requiring them to pay as much as $13 billion for spectrum and license fees. The companies were counting on some relief, such as a reversal of the earlier order, reduced liabilities or even staggered payment.

Also read:Supreme Court dismisses telcos plea seeking relief from AGR dues of ₹1.47 lakh crore

Shares of Vodafone-Idea tumbled as much as 39 per cent on Friday , the biggest intra-day loss on record. The court’s rebuff adds to the woes of the survivors of a brutal tariff war sparked by the 2016 entry of billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd, an upstart that disrupted the industry with free calls and cheap data. Both Bharti Airtel and Vodafone-Idea, with a combined net debt of about $30 billion, reported record losses in the quarter through September.

Vodafone-Idea in trouble

“Experience in India suggests it is unwise to talk of uncertainties, but it is very hard to see how Vodafone-Idea survives,” analysts at New Street Research LLP wrote in a report. “A two-player outcome would therefore be by far the most likely outcome, which is positive for Bharti,” they said.

While Bharti Airtel, run by tycoon Sunil Mittal, has managed to raise the $3 billion it needs to pay from a sale of shares and convertible bonds, Vodafone-Idea’s billionaire Chairman Kumar Mangalam Birla has warned that the company may have to cease operations and file for insolvency if the government does not ease their burden.

Shares of Bharti Airtel climbed as much as 5.2 per cent on Friday in Mumbai, while its perpetual, dollar-denominated bonds declined the most in two months.

The court on Thursday also rejected requests by telecom companies for rehearing the petition seeking relaxations on penalties sought by the government and deadline for the payment.

Also read:Vodafone Idea may shut shop if govt does not provide relief: Kumar Mangalam Birla

“We wonder how weaker operators like Vodafone-Idea will make this payment, and not that Bharti Airtel is getting any respite as the amount has to be paid up,” said Gaurang Shah, Vice President at Geojit Financial Services Ltd. “It isn’t easy to raise tariffs and retain customers. It remains to be seen how companies now respond to this decision because the court has twice spelled it out for them.”

For two decades, the operators had challenged the way authorities calculated their annual adjusted gross revenue, a share of which is paid as license and spectrum fees. With the October ruling, the court upheld the governments method, while rejecting the companies plea to exclude revenue from non-telecommunications businesses.

We are evaluating filing a curative petition, Airtel said in a statement after the ruling, an option echoed by Vodafone Idea as well. The industry continues to face severe financial stress and the outcome could further erode the viability of the sector as a whole.

Also read:Though telcos can file curative petition on AGR dues, they should be prepared for worst: Reports

“The government had raised a total demand of around 920 billion rupees ($13 billion) against all telecom operators, including defunct ones,” according to filings in the court.

“Vodafone may have some cash through rights issue but it wont be enough to meet the overall dues,” said Rajiv Sharma, an analyst at Sbicap Securities. “If there’s not enough relief, then it is going to be a matter of time before they shut down.”

In the past decade, India has seen a consolidation in the telecommunications industry. Three non-state operators are left now, from about a dozen four years ago. While Vodafone’s local unit announced its merger with Birla’s Idea Cellular Ltd in 2017, Aircel Ltd and tycoon Anil Ambani’s Reliance Communications Ltd slipped into bankruptcy last year. Others including Norway’s Telenor group and UAE’s Etisalat group exited the market.

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