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The death of Vodafone Idea starting to become a real prospect

Vodafone Group CEO Nick Read has reiterated his vow that no fresh funds would be injected into the Indian joint venture with Idea Cellular, painting a dreary picture for competition in the market.

As it stands, Vodafone Idea owes the Indian Government roughly $7.4 billion in spectrum fees, overdue payments and fines. Bharti Airtel is in a similar position, with both telcos pressing the authorities for relief. To date, the authorities are not budging, potentially undermining any commercial objectives for Vodafone in the region.

According to The Economic Times, Read has demanded the Government waive the penalties and interest payments, while also allowing Vodafone Idea to repay the principle sum over a period of ten years. Only if these demands are met, will Vodafone commit to continue the joint venture with Idea Cellular and push additional funds into the market.

This is a very stern statement from Read and one the Indian authorities should take very seriously. Numerous telcos have already left the market, and while it cannot be held to ransom by another, the competition landscape is looking suspect already.

The main issue here is a dispute over licence fees paid on spectrum assets. The telcos and the Government have different opinions on how much should be paid. This argument has been on-going for more than a decade, hence the ridiculous sums which Vodafone Idea and Bharti Airtel are being asked to pay. As Reliance Jio only came into existence in 2016, its own bill is much more palatable.

With extraordinary pressures already being placed on the spreadsheets thanks to the Reliance Jio disruption by undercutting existing pricing models, as well as a drive towards modernising infrastructure, this bill is the last thing the telcos need.

For Vodafone, you can see the predicament. There is a fortune to be made in India, but how much pain and expense can the business go through to realise it. The firm is facing difficulties in several other markets also; how many headaches can Nick Read tolerate at once? India might prove to be one migraine too far.


18 comments

  1. Avatar Gaurav C 06/02/2020 @ 8:57 pm

    Think Govt wouldn’t give any scope to either Voda or BhartiArtl for their survival, as they indirectly provide unethical support to the dearer one to have the cherry on the cream. Thats looks inevitable.

  2. Avatar Paul 07/02/2020 @ 4:37 am

    These articles are really good for Vodafone Idea.. They should derive more energy to survive. Nothing woks better than baseless critisism..

  3. Avatar DK sharma 07/02/2020 @ 10:33 am

    If only one company is going to remain in market. There would be no competition to favorite one. Hence total control on pricing as well as on media. Dangerous to democracy.

  4. Avatar Pankaj 07/02/2020 @ 12:44 pm

    Ye Modi kewal jumlebaaj h isne Economy barbad kr fi

  5. Avatar i am custmor of Airtel 07/02/2020 @ 5:34 pm

    Vodaphone and Airtel should be remai in Telco to break monopoly of My jio

  6. Avatar LAKSHMI KANT 07/02/2020 @ 6:07 pm

    In 2004 Airtel used to give talktime of Rs150 in Rs 350. More than 100 percent profit.Voda used to steal money of its customer by subscribing ringtones without consent Now they are repaying for their sins.

  7. Avatar Truth 07/02/2020 @ 8:13 pm

    Modi govt has been shamelessly favoring Ambani owned Jio. The AGR dues are unjustified because
    1. Revenue sharing mechanism was devised at a time when the spectrum was not auctioned. It was cheap, so telcos were instead asked to share their revenues with govt. But now when telcos pay huge sums for buying spectrum , there is no sense of sharing revenues with govt.

    2. Non core or non telecom revenues sharing do not make any sense.

    3. The Chief Justice who gave verdict against telcos looks corrupt. One weird thing about him is, his cousin was a Chief Justice. His uncle too was a chief justice. This looks like a family affair.

  8. Avatar Krishna 08/02/2020 @ 3:02 am

    Modi wants Jio to be monopoly and rob consumers like a blood sucker. Most worst PM Modi.

  9. Avatar Rajendra Saindane 08/02/2020 @ 6:14 am

    The dues towards spectrum /licence fees are genuine,companies are knowing it clearly during a spectrum allotment that over a period of time it has to pay..,…however fund was siphoned by pramoters…..shareholders and govt are made fools……

  10. Avatar Suraj 08/02/2020 @ 11:11 am

    This issue began much earlier the current or immediate past government so people should just stop jumping into acquisition to the current government.. these should be dealt by legal and business points of view and if the fate rests to go under then so be it. I’m a Vodafone customer and equally concerned about its future, if it is to pay more to help keep services up and help the business I’m willing to.

  11. Avatar V K Agarwal 09/02/2020 @ 1:27 pm

    The way price war was activated by Jio was attractive for consumers but very bad for economy. It wasn’t a healthy competition for which a level playing field is a must.
    It is a sad commentry on the performance of authorities who for reasons better known to them didn’t act timely to correct the direction in which things were heading.

  12. Avatar AK 09/02/2020 @ 3:29 pm

    How much were you paid for this “Breaking News” kind of Story. The investors in Vodafone Idea are really sick of this xxxx which guys like yiu help to float around !

    If you have any sense of being a real journalist, refrain from “Paid Writing” or be labelled as Junk ( worse than Porno as atleast it excites you into doing some exercise !!!) whereas guys like you not only bring shame to their profession but leave the readers with an acidic taste in the mouth – Oh No !! Not one more of THAT kind !!

  13. Avatar Mustafa 09/02/2020 @ 5:30 pm

    Just go at a Retail Outlet and Purchase one JIO Handset, u will be Surprised to read on the handset “Not for Retail Sales”. No GST bill to Customer either, so where is all this money going. It’s Simple for the benefit of one others are getting killed.

  14. Avatar Ak 09/02/2020 @ 5:43 pm

    Man why trying to sensationalize thru your article. People like you bring disrepute not only to your profession of Journalism but also reinforce the fact that Greed can make a man do anything in any corner of the world

    ( My earlier comment was i guess too direct & demeaning to a sold out journalist hence not approved. Hope this will go thru otherwise you will only prove me right as to the intent of publishing such an article especially this headline)

  15. Avatar Raj 10/02/2020 @ 9:03 am

    Vodafone had been doing very good in telecom industry। I have been using Vodafone since the date of Maxtouch and Orange।।and had no problems।।but in the past two months there are problems with proper network। Voda should be remained in the market।

  16. Avatar Sanjeev Kumar 10/02/2020 @ 10:57 am

    Modi government has favoured JIO and killed entire telecom industry,So much biased PM I never thought off,Even Jio killed handset industry by selling Rs 700 phone clearly written not for retail sale but selling through retailer only more than 3 crore handset sold without any GST bill big loss happened to our country.I No hope from this government

  17. Avatar P.m.s.bhattathiripad 10/02/2020 @ 1:10 pm

    1 It is not government it’s supreme court order which makes them pay.
    2 why idea / Vodafone did not provide for this amount in the earlier years when the case was going on
    3 The amount payable is that of two companies .. idea and Vodafone
    4. Do they expect govt to write off rightfully due amount and get a political wrath

  18. Avatar Nitin 10/02/2020 @ 2:43 pm

    From the beginning of the case it was known to Vodafone and Idea and Airtel that if the decision goes against them , they will have to pay ADR charges claimed by Govt dept. Still they just sidelined the demands and declared dividends to their shareholders ( owners ) . Now they are playing victim cards when the Supreme court has ruled the charges as lawful. Let the law prevail as they have looted the govt money. Pl note that Jio was not even born when the charges were supposed to be paid ( pertaining to years before 2011-12) but were disputed and court case stood in 2011-12. So , saying that govt is favouring Jio is a plain lie and dirty politics.
    This was a legitimate govt due and companies are avoiding it by playing long legal battles.

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