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.