Speculations are rife that Vodafone may end its India operations and exit the market because of the current liability and mounting losses in the joint-venture company Vodafone-Idea, said Indian media agency IANS. The British telecom giant has a liability of approximately $4 billion (Rs. 28,309 crore) on account of AGR to the federal Telecom Department.
There is buzz in telecom circles that Vodafone is ready to “pack up and leave any day now”. The joint venture is seeing vast losses in the number of subscribers every month and a dwindling market capitalisation is hurting any fresh fundraising. The Vodafone Group has not officially confirmed the news.
Following the sharp fall in shares, Vodafone-Idea clarified to stock exchanges on 25 October and again on Tuesday this week that the "SC (Supreme Court) judgement represents a significant event with respect for the company (sic)".
"We cannot presently comment on the correctness and completeness of the aforesaid figures. The company is studying the judgement and we will evaluate our next steps", it said.
"The Judgement has financial implications, which we are reviewing. We will engage with the DoT in order for it to consider granting relief, including a waiver on interest and penalties".
In a media statement on the AGR verdict, the company said, "Vodafone Idea is extremely disappointed by the Hon'ble Supreme Court judgment on the Adjusted Gross Revenue (AGR) case".
"We will study the ruling as soon as it is available, along with our legal advisers, to determine next steps. If there are technical or procedural grounds for doing so, this could include a Review Application", the company said.
Vodafone-Idea, on Wednesday, issued a clarification on the claim that the firm has approached its lenders for debt recast.
“There has been reportage in some media alleging that Vodafone-Idea has approached its lenders for a debt recast. We categorically deny and dismiss this as baseless and factually incorrect. We have not made any request for debt recast to any lender or asked for reworking of payment terms. We continue to pay all our debts as and when these fall due”, the company said.
Vodafone’s India subsidiary merged with another network provider, Idea Cellular, in 2018, forming India’s largest telecom operator with over 400 million subscribers, Vodafone-Idea limited.
However, the company kept losing subscribers and in July 2019 its user base declined to 320 million from 334.1 million, the telecom firm reported.
"Our subscriber base declined to 320.0 million from 334.1 million in fourth quarter of financial year 2019 primarily due to customer churn following the introduction of ‘service validity vouchers' in the prior quarters", Vodafone-Idea said in a statement.