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London, November 12
Vodafone today said its future in India could be in doubt unless the government stopped hitting operators with higher taxes and charges, after a court judgment over licence fee resulted in a 1.9 billion euro loss to the group in its first half.
Chief Executive Nick Read said India, where Vodafone formed a joint venture with Idea Cellular in 2018, had been “a very challenging situation for a long time”, but it remained a sizable market where Vodafone had a 30% share.
“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 today.
Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower licence fee and taxes and waiving 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 any relief package, he said: “It’s fair to say it’s a very critical situation.”
Read said Vodafone was not committing any more equity to India and the country effectively contributed zero value to the company’s share price.
Vodafone, the world’s second largest mobile operator, reported improving organic revenue growth as it saw signs of improvement in Spain and Italy and as it integrates its German cable acquisition.
It reported organic service revenue growth of 0.3% in the first half, as it returned to growth in the second quarter, while organic core earnings rose 1.4%. It increased its forecast for adjusted core earnings to 14.8-15.0 billion euros from its previous forecast of 13.8-14.2 billion euros, but said India and lower cash flows following the sale of assets in New Zealand meant free cash flow would be “around” 5.4 billion euros, rather than “at least” 5.4 billion euros, as it previously forecast. — Reuters
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