Vodafone-Idea which is the second-largest telecom company in India is heading towards liquidation. The ongoing scuffle in the Indian telecom market has led to plummeting of Vodafone’s local joint venture to zero or nil. CEO of Vodafone Nick Read has pointed out that the company’s operation is approaching liquidation unless the government intervenes and provides some relief on the mobile spectrum. According to the financial results announced by Vodafone Group
on Tuesday, the book value of its 45 percent business in India has plunged to zero in November 2019. The book value of the company was 2 billion euros in June 2018, but in May, the book value had dropped to 1.5 billion euros. Vodafone’s losses in India could be attributed to write-downs, losses, reduced cash flows and the Supreme Court’s recent judgment. "As the Group has no obligation to fund VIL losses, the Group has recognised its share of estimated Vodafone Idea Limited ('VIL') losses arising from both its operating activities and those in relation to the AGR judgement to an amount that is limited to the remaining carrying value of VIL, which is therefore reduced to nil," Vodafone said. At a press briefing, Read said that the company’s future in India is uncertain as the government is burdening the operators by increasing the taxes in the backdrop of the Supreme Court’s order to pay an outstanding amount of INR 92,000.
Vodafone has sought relief from the center in the form of relief package that includes a two-year postponement on spectrum payments, reducing license fees and taxes and waiving of penalties in the Supreme Court verdict.
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