Vodafone threatening India? CEO says might have to stop operations if the taxes are now lowered

Vodafone CEO Nick Read

Vodafone indicated that they may be forced to quit operations in India if the government does not stop slapping the network providers with suck huge charges and taxes. In the first half of the financial year, Vodafone lost around EURO 1.9 billion on a group level following the court’s ruling over the license fees.

Nick Read, CEO Vodafone Group Plc., said even after Vodafone’s JV (Joint Venture) with Idea Cellular back in 2018, they have been facing ‘a very challenging situation for a long time’ and the only reason they stayed in the country because of the market they have. Vodafone’s market share was 30%.

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Today, Nick Read said ‘Financially there’s been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative Supreme Court decision’.

Vodafone had already pled the Indian government for a relief package which contains lower taxes and license fees, waver on penalties and interest on the case (Case is on Regulatory fees) in Supreme Court of India, and 2 years moratorium on payment for the spectrums.

When Nick was asked whether it make any sense for Vodafone to stay in India if the relief package(s) are not provided, to which he replied ‘It’s fair to say it’s a very critical situation’. Having said that, he also said that, Vodafone is not pouring in any more money to its India operations as the country did not contribute anything (0 value) to the company’s share price.

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The company saw an increase of 161 pence (0.6%) as investors heard that Vodafone is not going to further invest in the Dog market (BCG Matrix).

Vodafone, one of the largest network providers globally, reported positive increase in the organic revenue as the company saw improvements in the European market, specifically, Italy, Germany, and Spain.

According to the reports, company’s organic revenue in the first half grew by 0.3% and in the second half organic revenue saw a growth of 1.4%.

Vodafone also showed the revised earning forecast, now the company expects revenue of EURO 14.8 billion to EURO 15 billion as opposed to EURO 13.8 billion to EURO 14.2 billion earlier. However, due to its performance, hurdles, and charges in India and other low cash flow markets will impact the ‘free cash flow’ even after the company sold off assets in New Zealand. According to the report, ‘free cash flow’ is expected to be ‘around’ EURO 5.4 billion as opposed to previous forecast of ‘at least’ EURO 5.4 billion.

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Vodafone’s CEO Nick Read said he is happy with the developments and how his strategies are executed. He added ‘This is reflected in our return to top-line growth in the second quarter, which we expect to build upon in the second half of the year in both Europe and Africa’.

In May, Read was forced to break his word on not cutting the dividends, as the company cut the payouts owing to rough market conditions and an urgent need of investment in the airwaves and networks of the company.

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