ET Markets
12,180.3573.45
Stock Analysis, IPO, Mutual Funds, Bonds & More

Vodafone Idea falls 8% on group CEO's comments

Vodafone Group CEO Nick Read on Tuesday described the status of its joint venture in India as “critical” in the wake of a Supreme Court order.

ET Bureau|
Updated: Nov 13, 2019, 03.45 PM IST
0Comments
Agencies
Vodafone idea
The unit effectively contributes nothing to the British company’s share price, Read said after Vodafone Plc’s September quarter results were announced in London.
NEW DELHI: Vodafone Idea shares dropped 8 per cent in Wednesday's trade, a day after Vodafone Group CEO warned that without government relief, its venture in India is in a critical situation.

Vodafone Group CEO Nick Read on Tuesday described the status of its joint venture in India as “critical” in the wake of a Supreme Court order that left the telecom company facing thousands of crores in additional statutory dues. The unit’s “carrying value” has been reduced to zero, he said, while also citing “unsupportive regulation (and) excessive taxes.”

Read said the Vodafone Group won’t infuse any further equity into Vodafone Idea (VIL), having written down the value of its joint venture with the Aditya Birla Group to zero after the Supreme Court ruling on adjusted gross revenue (AGR).

The unit effectively contributes nothing to the British company’s share price, Read said after Vodafone Plc’s September quarter results were announced in London.

“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. “The government has stated its desire not to end up with a monopoly.” Vodafone has sought a waiver of interest and penalties on the dues, among other relaxations.

Ravaged by a three-year price war since the entry of Reliance Jio in late 2016, Vodafone India, once India’s No. 2 telco, was forced to merge with third-ranked Idea Cellular, an Aditya Birla Group company. But the merger, in which the UK telco holds a 45% stake, hasn’t helped, with the new entity reporting quarterly losses of nearly Rs 5,000 crore under continuing price competition, despite a recent Rs 25,000 crore equity infusion by both parents via a rights issue.

“Financially, there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative Supreme Court decision,” Read said, adding that India had been “a very challenging situation for a long time.”

The Supreme Court order of October 24 ruled that noncore items should be included in computing AGR. It left the telco 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 shares of the company closed 7.50 per cent lower at Rs 3.70 on BSE.

Also Read

RBI cancels certificate of authorisation of Vodafone m-pesa

Buzzing stocks: Vodafone Idea, RIL, TCS, NHPC

Vodafone Idea jumps 5% on reports of fundraising plan

Share market update: Telecom shares advance; Vodafone Idea surges 7%

Buzzing stocks: Vodafone Idea, YES Bank, Axis Bank, L&T

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service