Vodafone India could soon quit the Indian telecom market after facing a serious financial crunch. It is also losing its existing subscriber.
India’s leading telecom operator Vodafone may leave the Indian market is currently the most recent rumor going the rounds within the Indian telecom circle. This comes after the recent Supreme Court administering that sustained the central government’s definition of Adjusted Gross Revenue (AGR) expressing that certain operators including Vodafone would must have to hack up about Rs 92000 crores under different charges such as spectrum utilization, license expense, outstanding taxes, penalties and interest to the Department of Telecommunications (DOT).
In a press release following the aforesaid judgment, Vodafone Idea said it might ask the government for a waiver on the interest and penalties because it might otherwise have serious financial implications for the company. According to the operator:
The company is studying the judgment and we will evaluate our next steps. We will engage with the DoT in order for it to consider granting relief, including a waiver on interest and penalties.
Is Vodafone Leaving India?
As per an IANS report, the company considering quitting their Indian operations, and “pack up and leave any day now”. When the IANS contacted the company officials for a statement, then they were asked to contact Ben Padovan, Group Head of Corporate Communications, Vodafone Group Plc. There has been no reply or confirmation about this news as of now.
Why Will Vodafone Leave India?
The rumors about a possible shutdown by Vodafone started to afloat, after reports came in that Vodafone-Idea is attempting a debt recast, as they are attempting to contact their lenders.
This news was denied by Vodafone, as they said in a statement:
There has been reportage in some media alleging that Vodafone Idea has approached its lenders for debt recast. We categorically deny and dismiss this as baseless and factually incorrect. We have not made any request for debt recast to any lender or asked for a reworking of payment terms. We continue to pay all our debts as and when these falls due,
Interestingly, the news about a possible shutdown comes at a time when the Supreme Court has ordered Vodafone-Idea to pay a penalty of Rs 28,300 crore, over the AGR issue. After this verdict, their share prices fell to a 52-week low to Rs 3.35, even as their market capitalization fell. In the last quarter, Vodafone-Idea’s subscriber base dropped by over 36 lakh to reach 38 crores, compared to 33.9 crores of Jio and 32.85 crores of Airtel.
In a media statement on the AGR verdict, the company said,
A significant investment of several billion dollars has been made in creating world-class networks. Today’s order has a huge impact on two private operators while most of the other impacted operators have exited the sector. We urgently request that the government engage in this matter in order to find ways to mitigate the financial stress for the industry.
In another setback, Vodafone-Idea announced last week that in regard to the merger of Indus Towers, in which it holds 11.15 percent equity, with Bharti Infratel, it has not been possible to meet the conditions, including DoT approval under the FDI regulations before the target date of 24 October. The parties have entered into an agreement to extend the date by two months to 24 December.
Vodafone Idea will receive a lower cash payment based on the fall in the share price of Bharti Infratel, movements in net debt at Bharti lnfratel and Indus.