Vodafone CEO Nick Read 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 license fees resulted in a 1.9 billion euro group loss in its first half.
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 Vodafone Idea still had 300 million customers, equating to a 30 percent share of the sizable market.
“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 license fees and taxes and the waiving of interest and penalties on the Supreme Court case, which centered on regulatory fees, Reuters reported.
Asked if it made sense for Vodafone to remain in India without such a relief package, he said: “It’s fair to say it’s a very critical situation.”
India’s Supreme Court upheld a demand from the country’s telecoms department for $13 billion in overdue levies and interest last month, hitting the shares of both Vodafone Idea and rival Bharti Airtel.
Vodafone has clashed with Indian authorities over tax and regulatory issues ever since it entered the country with a $11 billion deal to buy 67 percent of Hutchison Essar in 2007.
The arrival of new entrant Reliance Jio Infocomm in 2016 added to Vodafone’s problems by sparking a price war.
Nick Read said Vodafone was not committing any more equity to India and the country effectively contributed zero value to the company’s share price. As a result of the ruling, it has written down the value of its stake in the joint venture to zero.
Vodafone, the second largest mobile operator in the world, also owns a stake in Indian tower operator Indus Towers, along with Bharti Airtel.