ووڈافون آئیڈیا کی حالت نازک ہے

ووڈافون آئیڈیا کی حالت نازک ہے


Translating…

Vodafone’s global CEO Nick Read said that unsupportive regulation and excessive taxes in India has pushed the value of its joint venture in India to zero.

Global telecom giant Vodafone’s joint venture in India is at a critical juncture and may soon have to be liquidated, according to the company’s global CEO Nick Read. This comes as the company faces a price war as well as a massive fine in India, which has pushed the value of Vodafone’s joint venture in India to zero. 

Nick Read indicated on Tuesday that the Indian operations may be headed for liquidation unless the Indian government provides relief on mobile spectrum fees and cited “unsupportive regulation” and “excessive taxes” as reasons. He stated, “It’s a very critical situation.”

“If you’re not a going concern, you’re moving into a liquidation scenario—can’t get any clearer than that,” he told the press. 

According to reports, when asked if it makes sense for Vodafone to continue to remain in the country, Read said, “The government has stated its desire not to end up with a monopoly.”

At the moment, it is unclear how this move will affect consumers. 

However, the company will not be infusing any more equity to the country and has sought the government’s help to get out of its sticky situation. 

“Financially, there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative Supreme Court decision,” he stated.

The Supreme Court decision being referred to is the one in Union of India vs. Association of Unified Telecom Service Providers of India, which was regarding the interpretation of adjusted gross revenue (AGR), a concept used in the calculation of certain regulatory fees. Putting an end to the 14-year-old legal battle, the SC said that telecom operators have to shell out a whopping Rs 92,000 crore in total in past dues at a time when they are already grappling with tough competition, debt pressure and shrinking revenues. 

Of this, Vodafone Idea now has to pay Rs 28,000 crore in additional licence fee dues, in addition to over Rs 11,000 crore in spectrum usage charge dues.

In Vodafone’s financial results released on Tuesday, most of Vodafone’s bad news came from India. This included write-downs, losses, reduced cash flows and provisions for the Supreme Court judgement.

The value of Vodafone’s India operations has been reduced to zero in the company’s books — a write-off of over $1 billion. “As the Group has no obligation to fund VIL losses, the Group has recognised its share of estimated Vodafone Idea Limited (‘VIL’) losses arising from both its operating activities and those in relation to the AGR judgement to an amount that is limited to the remaining carrying value of VIL, which is therefore reduced to nil,” Vodafone said. 

“If the carrying value had been high enough not to have restricted the Group’s share of losses, then the recognised share of losses would have been substantially higher,” it said. The carrying value is the value of the company’s business or assets in its balance sheet.

Making matters worse, Vodafone Idea reportedly has a debt of around $14 billion.

Vodafone entered the Indian market in 2007 as ‘Hutch’ in partnership with Hutchison Essar. At the time, it had bought 67% in the company for $11 billion. It then merged its Indian operations with Idea in 2018, coming to be now known as Vodafone Idea. Vodafone as a 45% stake in this venture. Currently, as per TRAI’s latest subscriber data Vodafone Idea is the largest telecom company with over 38 crore subscribers in India.

Ever since Jio entered the market in 2016 it has been locked in a price war in the country. 

The government is now attempting to alleviate the stress on the industry and has set up a panel of secretaries to recommend relief measures, including on AGR. Jio, however, has vehemently opposed such measures. 

With IANS inputs