Wednesday

Vodafone Idea Headed for Liquidation Unless the Indian Government Provides Relief: Vodafone CEO


Highlights


  • Vodafone Idea lost its top spot to Reliance Jio earlier this year

  • Vodafone Idea Limited is now the second largest telco in India

  • Vodafone CEO Nick Read asks for immediate government intervention for relief




Vodafone Idea may soon be headed for liquidation as the condition of the merged entity is in a critical stage right now. According to Vodafone CEO Nick Read, the value for the Vodafone Idea entity in India right now is zero as the telco is facing severe price war and the recent fine on AGR has made the things even worse. Nick Read added “It’s a very critical situation,” and the company will soon face liquidation if the Indian government does not intervene and provide relief to the telco. The report coming from IANS also reveals that Nick Read did not confirm whether Vodafone is planning to leave the joint venture at the moment because the government does not want the industry to end up with a monopoly.



Vodafone CEO Nick Read Urges for Government Intervention to Rescue Telcos


A couple of years ago, Vodafone Idea Limited formed the largest telco in the Indian market with over 400 million subscribers and the highest revenue market share. But the merger between both the telcos did not help them stay strong in the industry as the merged entity lost its top spot to Reliance Jio- both in terms of subscriber base and revenue market share. Right now, Vodafone Idea is in a tricky situation as the losses are mounting with every passing quarter, competition in the industry is not going away, and on top of that, the Supreme Court gave an unfavourable AGR dues decision last month.


Vodafone CEO Nick Read urges the Indian government intervention right away before the telco goes for liquidation. “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, as reported by IANS.


A recent report surfaced online stated that Vodafone is looking to exit the joint venture and leave the country. Already, the merged entity rubbished this rumour citing it as baseless. Now, Vodafone CEO himself said “The government has stated its desire not to end up with a monopoly,” when asked about the UK-based telco’s participation in the Indian telecom industry.


That said, Vodafone will not be infusing any more equity to the merged entity and asks the government to bail out from this tricky 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.


Vodafone Idea Required to Pay Around Rs 39,000 Crore Dues


It has been a tough few months for Vodafone Idea and other Indian telecom operators. The Supreme Court recently put an end to a 14-year old legal issue by saying telecom operators in the country will have to pay Rs 92,000 crore as adjusted gross revenue (AGR). Already, Bharti Airtel and Vodafone Idea are reeling under losses and the tariff prices are also not going up as everyone expected.


As part of this Supreme Court decision, Vodafone Idea will have to pay over Rs 11,000 crore as spectrum usage charge dues and Rs 28,000 crore as licence fee dues.


We’re worried about the future of Vodafone Idea as the government remains unmoved despite several requests from the telecom operators. Bharti Airtel and Vodafone Idea already confirmed that they would legally charge the decision of the Supreme Court, but at the end, they will have to pay the respective dues.

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