In wake of the recent orders issued by the Supreme Court of India to the telecom companies, companies such as Vodafone Idea are undergoing tough times.
As per the order, Vodafone Idea Ltd has been directed to pay $4 Billion for clearing its past dues. As of result of this, the group’s Indian business arm may soon hang up its boots, says the company’s CEO.
The apex court of the country had directed the company to clear the dues as it was perpetuating the government’s definition of gross revenue. License fees and payments submitted by the telecom operators are calculated via this meaning of gross revenue.
Vodafone Idea has an ongoing debt of $14 billion in Newbury and another airwave auction is fast approaching. The England-based company has thus finalized not to invest more money into the business.
Vodafone was facing a stiff competition post the launch of low-price model by Reliance Jio Infocomm Ltd. by Mukesh Ambani.
“If you don’t get the remedies being suggested, the situation is critical. If you’re not a going concern, you’re moving into a liquidation scenario–can’t get any clearer than that,” said Nick Read, CEO, Vodafone.
Vodafone, that owns about 45 percent of Vodafone Idea, has requested for a two-year time on spectrum payments and a lowering of license fees and other taxes.
Moreover, the company has requested the courts to break those spectrum payments into 10 years and is also looking for relaxations on interest and penalties.
Headed by cabinet secretary Rajiv Gauba, a government committee is analysing the request made by Read. If the situation continues to be like this, the company may close down its operations in India, he added. This move is likely to have a serious blow on the telecomm sector jobs in the country which have already seen a steep decline in the last two years.