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Vodafone reportedly seeking to further reduce its exposure to India

Last week the Indian Supreme Court rejected another appeal to lower the amount of money operators owe the government and it looks like Vodafone is running out of patience.

The Indian government reckons Indian telcos owe it some kind of historical tax or license fee based on a calculation known as adjusted gross revenue (AGR). Most of it is owed by Vodafone Idea and Bharti Airtel as they’ve been around for much longer than current dominant player Jio, but they think the tax applies to too much of their revenue and have been pushing for a much lower rate for some time.

This time last year they appealed to the Indian Supreme Court to intervene, having failed to extract any concessions from the government, but got nowhere. They recently decided to have another go but, as Reuters reports, once more left empty-handed. Light Reading has a good account of the sums of money involved, with Vodafone Idea by far the most exposed and expected to hand over hundreds of billions of rupees over the next few years.

Vodafone group is still the biggest shareholder in Vodafone Idea, with a 45% stake, but there are signs it’s increasingly keen to wash its hands of as much of this aggro as possible. The Hindustan Times has been chatting to a couple of anonymous sources who reckon Vodafone is prepared to relinquish control of the company if a strategic investor fancies the challenge.

This option is apparently being considered because they’re struggling to attract regular investors, so dangling the carrot of strategic control has become necessary. But the fact of the massive government debt remains and, unless a new regime in charge of the company results in a change of heart from the Indian government, it’s hard to see what any strategic investor could do to significantly improve the fate of Vodafone Idea.


6 comments

  1. Avatar Professor Peter Curwen 26/07/2021 @ 5:45 pm

    Vodafone Idea has nearly 300 mn customers – in other words, comfortably in the world top 10 by users – but Vodafone gets revenue from only some 45% of them and ARPU is low. Vodafone has ducked out of eg Japan so it must threaten meaningfully, to exit left irrespective of a buyer – there won’t be one anyway given the alleged debts. There are three and a (state-owned) bit operators but does the government really want two and a bit even if it has a relationship with Jio and/or Bharti?

  2. Avatar Ajith Krishnan 27/07/2021 @ 1:00 am

    The Indian Authorities has failed in giving justice to the operators( voda,ttml bharthi)by not allowing the AGR dues calculation mistakes to be corrected, it would have given the telecom operators respite from the heavy liability payments.
    The Rcom spectrum and licence is being used by Jio but Rcom can’t payup as its insolvent. Government won’t persue Jio to pay up

  3. Avatar Radhakrishnan 27/07/2021 @ 4:32 am

    Why not invite new foreign players and investors to buy spectrum and own licenses and operate mobile telephony and AGR case is twenty years old a overhaul of the legal system to decide such cases within 90 to 180 days required otherwise the investment climate will suffer and achieving usd 5 trillion economy will setback

  4. Avatar Rohit jain 27/07/2021 @ 4:46 am

    Govt hv supported single handed jio as a result overall telecom industry in bad shape- very very biased approach- jio hv used rcom spectrum free which given them edge vs competiton

  5. Avatar Prabhat Kumar Darbari 27/07/2021 @ 5:09 am

    Govt must help vodaphone and come out with some solution to prevent monopoly , in the interest of consumers
    and to save lakhs of jobs given by vodaphone at the time of pandemic any wrong decision will be disastrous

  6. Avatar David Hold 27/07/2021 @ 10:16 am

    Looking for government for a handout or even solution is not going to work . There are viable solutions and over the years have tried to reach out and offer it. But as they say disruptive technology has no pedigree and sitting in their high towers surrounded by their expensive advisers it is not going to work. Why should the rest of the citizens pay for their years of blunder when bankers are walking away. If they can’t compete than let them fold

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