Vodafone says future in India bleak unless Govt stops hitting operators with taxes

A bleak future looms for one of the biggest telecom operators in the world- Vodafone. The unsupportive regulation, excessive taxes, and to top it off a negative Supreme Court judgement has made Vodafone Group chief executive Nick Read to call the current status of its joint venture in India as “critical”.

“It’s a very critical situation,” Read said when asked if it made sense for the Vodafone Group to remain in India without any government relief package for the sector.

Once telecom sector’s number 2 player in India was sent packing after the entry of Reliance Jio in the market. To sustain, the company had to merge with third-ranked Idea Cellular, an Aditya Birla Group company. But, the merger doesn’t seem to be of any help with quarterly losses of nearly Rs 5,000 crore.

"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 on Tuesday.

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.

However, the Supreme Court order of October 24 ruled that non-core items should be included in computing AGR. It left the company facing over Rs 28,000 crore in additional licence fee dues, besides more than Rs 11,000 crore in spectrum usage charge dues. Vodafone Idea’s revenue in the June quarter was Rs 11,300 crore.

“The government has stated its desire not to end up with a monopoly,” he added.

Meanwhile CNBC claimed that Vodafone CEO apologised via a letter to the Union Minister Ravi Shankar Prasad after the minister expressed his displeasure to Kumar Mangalam Birla about Vodafone CEO's comments. Reportedly Nick Read said that he has been quoted out of context and he appreciates steps being taken by Indian government.