Vodaphone May Quit India Over £1.6bn Loss

Vodaphone May Quit India Over £1.6bn Loss

By Eric King-

UK-based mobile giant Vodafone is at a loss of £1.6bn after a ruling by India’s top court threatens to land it with huge fees and penalties.

The firm, which has 300 million customers in India is the country’s biggest foreign investor could find itself under pressure to pull out of the country where it is the largest foreign direct investor.
The court judgement is in relation to a decade-long battle over the calculation of licence and other regulatory fees.
Vodafone said its liability appeared to be at least £3.2bn but warned it “could be substantially higher”.

The mobile operator said it may seek a review of the supreme court’s decision, which saw it post a loss in the six months to 30 September. India’s Supreme Court made a ruling in October that Vodaphone must pay £14m in unpaid taxes dating back 14 years. Vodaphone has said it could quit India over the rows.

Chief executive Nick Read has halted further investment until the issue is resolved
Announcing its results for the period, the company said: “In October the Supreme Court in India ruled against the industry in a dispute over the calculation of licence and other regulatory fees, and Vodafone Idea is now liable for very substantial demands made by the Department of Telecommunications in relation to these fees.

“We are actively engaging with the government to seek financial relief for Vodafone Idea.”

Vodafone chief executive Nick Read said: “The situation is critical. I think the government are left in no doubt on our position.

“We are India’s largest foreign direct investment investor and I think there’s a moment where you have to say we’ve been commercially successful and our brand is strong.

“What we need is a supportive regulatory environment and prices that are sustainable.

“It’s been a very challenging situation for a long time and, if you look at the share price in India, it is effectively has zero value.”

Mr Read revealed he had travelled to India with Vodafone’s chairman, Gerard Kleisterlee, last month to lay out the company’s demands to ministers.

He has asked for a two-year moratorium before any payments are made, lower taxes in the country, the waiving of interest and fines associated with the judgment, and to spread out the fee costs over 10 years.
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