At a time when the country is faced with an economic slowdown and job losses, Vodafone has announced that its future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges.?
Chief Executive Nick Read was quoted as saying by news agency Reuters that, India, where Vodafone formed a joint venture with Idea Cellular in 2018, had been ¡°a very challenging situation for a long time,¡± but Vodafone Idea still has 300 million customers, equating to a 30% share of the sizable market.
Kumar Mangalam Birla, Chairman, Aditya Birla Group and Idea Cellular Limited, and Mr. Vittorio Colao, CEO, Vodafone Group Plc at the Idea Vodafone merger PC in Mumbai. FILE PHOTO BCCL
¡°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 said.
Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower licence fees and taxes and the waiving of interest and penalties on the Supreme Court case, which centred on regulatory fees.
Asked if it made sense for Vodafone to remain in India without such a relief package, he said: ¡°It¡¯s fair to say it¡¯s a very critical situation.¡±
The Supreme court upheld a demand from the telecoms department for $13 billion in overdue levies and interest last month, hitting the shares of both Vodafone Idea and rival Bharti Airtel. Vodafone has clashed with Indian authorities over tax and regulatory issues ever since it entered the country.?
REPRESENTATIONAL IMAGE. REUTERS
The arrival of new entrant Reliance Jio Infocomm in 2016 added to Vodafone¡¯s problems by sparking a brutal price war, Reuters contended.?
Vodafone responded by combining its operations with Idea Cellular, a deal that closed in 2018.
Read said Vodafone was not committing any more equity to India and the country effectively contributed zero value to the company¡¯s share price. As a result of the ruling, it has written down the value of its stake in the joint venture to zero.
It also owns a stake in Indian tower operator Indus Towers, along with Bharti Airtel.
Over the past couple of months, reports of economic slowdown has made repeated headlines in India. The auto sector has been worst affected and at least 3.5 lakh jobs have been lost in it alone. This comes at a time when India is faced with a high unemployment rate even as the number of job seekers is multiplying with every passing day.?
Several other leading corporate houses, as well as prominent businessmen, have blamed the government and policymakers for the current crisis.?