News: India business faces collapse: Vodafone CEO

#Corporate

India business faces collapse: Vodafone CEO

As the telecomm industry in India is facing orders from the Supreme Court to pay dues, companies such as Vodafone Idea are facing turbulent times.
India business faces collapse: Vodafone CEO

In light of the $4 Bn of fees in past dues that Vodafone Idea Ltd has been ordered by the Supreme Court to pay, the group’s Indian business arm might soon be headed towards liquidation, according to the company’s CEO. 

The top court of the country had ordered the company to pay the dues as it was upholding a government’s definition of gross revenue. License fees and payments paid by telecom operators are calculated through this meaning of gross revenue. 

Vodafone Idea is already $14 Bn in debt in Newbury and another airwave auction is fast approaching. The England-based company has thus decided not to put more money into the business. As a price war is being waged in India’s telecom industry since the launch of low-price model by Reliance Jio Infocomm Ltd. by Mukesh Ambani, who also happens to be Asia’s richest man. 

“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, Vodafone CEO. 

Vodafone, which also owns about 45 percent of Vodafone Idea, has asked for a two-year delay on spectrum payments and a lowering of license fees and other taxes. Moreover, the company has asked the courts to spread those spectrum payments over 10 years and is also looking for waivers on interest and penalties. 

Headed by cabinet secretary Rajiv Gauba, a government committee is looking into the request made by Read. If the situation continues to be "critical" the company could close down its operations in India, he added. This move could have a serious impact on the telecomm sector jobs in the country which have already seen a steady decline in the last two years. 

As the landscape of work and definitions of job roles evolve, the nature of future jobs in the telecomm sector are likely to transform radically. 

 

Topics: #Corporate, C-Suite

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