Vodafone CEO Nick Read recently told that they soon might have to liquidate because at present they are in a critical stage. Also known as the Global telecom giant, Vodafone is finding it tough to survive in the firstly because of the Indian regulations and second because of the exorbitant rate of tax. All these have led the joint venture in India to soon go into liquidation. It is facing missive fine and a price war with other telecom companies, and all this has moved the Vodafone’s joint venture in India to zero.
On Tuesday, Nick indicated that Vodafone India’s operation might soon head towards the process of liquidation. However, this may be avoided if the government provides the company with some relief on the mobile spectrum fees and he added that excessive tax and the unsupported regulation as a reason which is forcing them to go for liquidation. He said, “If you’re not a going concern, you’re moving into a liquidation scenario can’t get any clearer than that,”.
As per the report, when asked what the chances that Vodafone will continue to operate in India are, Nick replied that the Indian government have made up their mind and have shown their desire not to end the Telecom Monopoly in the country. What will be its effect on the consumer, is still not clear and cannot be deduced at the moment?
Vodafone India’s operation will not be releasing any more equity in India and is looking for help from the government to take them out of this challenging situation.
Not only the burden of tax and regulation is forcing them for liquidation but also the recent Supreme Court decision that came against the telecom and made the situation even worse. In the matter of Union of India vs Association of Unified Telecom Service Providers of India, where the issue was the interpretation of the word adjusted gross revenue which is a term that is used to calculate some of the regulatory fees, Supreme court gave the judgement against the telecom operators. It held that the telecom operators have to pay a hefty sum of Rs 92,000 crore as their past due, the decision came when these operators were already facing cut-throat competition, reduction in revenue and debt pressure.
Now the Vodafone-Idea have to pay Rs 28,000 crore as a license fee (additional) and Rs 11,000 crore for the due amount on the spectrum usage charge.
In the year 2007, Vodafone cam to India and was known as Hutch as they were in partnership with Hutchison Essar. Later, it merged with Idea in 2018 and is now known as Vodafone Idea. According to the latest subscriber data of TRAI’s, this venture has the maximum number of subscribers which is 38 crores.
However, after Jio entered India’s Telecom market things become tough for other operators because of their excessive less price for the users. To remove such difficulties for the operator, the government is looking for measured to remove the on-going stress in the Telecom Industry.
