Vodafone says future in India could be in doubt without government relief

'Financially there's been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative SC decision,' Vodafone CEO said.

Published: 12th November 2019 06:29 PM  |   Last Updated: 13th November 2019 12:09 PM   |  A+A-

Vodafone-Idea Cellular to merger within two years. (File photo | Reuters)

Image used for representational purpose only

Express News Service

NEW DELHI:  Vodafone Group PLC said on Tuesday the future of its India business is uncertain due to unfriendly regulation, tax terrorism and expensive court rulings. The British telecom major also announced it has written down the value of its India joint venture Vodafone-Idea on its books to zero.

According to analysts, the parent company will not infuse any more capital to the JV until there is clarity on whether the Indian government will provide relief from the Rs 28,310 crore dues VIL stands to pay by the end of the year.

ALSO READ: Vodafone may write down whopping USD 1.1 billion in half-year results, here's why!

Vodafone CEO Nick Read wants New Delhi to ease off on payment demands to ensure the JV’s future in India. The recent SC judgment widened the scope for calculating adjusted gross revenues of telcos to include income from non-telecom services.

This meant the licence fees went up and they were liable to pay remainder back-fees along with penalty and interest.

‘NO OBLIGATION TO FUND VODAFONE IDEA LTD LOSSES’

"Having considered the possible future developments for VIL, the Group has concluded that there are significant uncertainties in relation to VIL's ability to settle the liabilities relating to the AGR judgment… The Group's potential exposure under this mechanism is capped at Rs 8,400 crore," Vodafone Group said in stock exchange filings.

ALSO READ: Vodafone Group quashes rumours of India exit

It went on to note that since it had "no obligation to fund VIL losses" as per the JV agreement with the Aditya Birla Group, it has recognised its share of losses arising from both operating activities and the AGR judgment to the remaining carrying value of VIL, "which is therefore reduced to nil".

VIL's carrying value was 1.392 billion euros as of March 31, 2019, with another 1.41 billion euros invested via a rights issue in May this year. Mounting Indian losses and the write-down have pushed Vodafone Group into a 1.9 billion euro net loss during the first half of the current financial year, even as operations improved in its other markets like New Zealand.

ALSO READ: India refuses to waive off USD 13 billion dues of Vodafone Idea and Airtel 

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