New Delhi: British telecom giant Vodafone said Tuesday its future in India could be in doubt if it is forced to pay thousands of crores in statutory dues following the Supreme Court ruling.
Having made no provision for dues that have been locked up in legal dispute for more than a decade, Vodafone chief executive Nick Read said the government needs to ease off on payment demands to ensure a future for group’s India joint venture, Vodafone-Idea Ltd.
“Financially there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative Supreme Court decision,” Nick Read said on a call with reporters after first half results.
India, he said, had been ‘a very challenging situation for a long time’. “It’s a very critical situation,” Read pointed out when asked if it made sense for Vodafone to remain in India without any relief package. “The government has stated its desire not to end up with a monopoly.”
Vodafone’s operating loss from India business jumped to 692 million euros in April-September from 133 million euros in the same period last year.
Vodafone said the 1.9 billion euros in the loss for the group during six months ended September 30 ‘primarily reflects losses in relation to Vodafone-Idea post an adverse judgement against the industry by the Supreme Court of India’.
In the earnings statement, the group made no further commitment to equity in India business, which it said contributed zero value. It saw free cash flow of around 5.4 billion euros versus previous guidance of at least 5.4 billion.
“In October, the Supreme Court in India ruled against the industry in a dispute over the calculation of licence and other regulatory fees, and Vodafone Idea is now liable for very substantial demands made by the Department of Telecommunications in relation to these fees,” the company said in its earnings statement. “We are actively engaging with the government to seek financial relief for Vodafone Idea.”
The liability in telecom licence fee and spectrum usage charge together with penalty and interest for late payment may run into Rs 1.4 lakh crore for the industry. Vodafone-Idea may have to pay a third of it.
The group’s carrying value was 1,392 million euros at March 31, 2019, and in May 2019, the group invested 1,410 million euros via a rights issue.
PTI
