The battered Indian telecom sector is now bleeding heavily. Vodafone-Idea and Bharti Airtel, once among the country’s most aspirational and profitable companies, on Thursday reported record quarterly losses cumulatively standing at Rs 74,000 crore.
Bruises from the price war unleashed by Reliance Jio were aggravated by the Supreme Court’s recent Adjusted Gross Revenue (AGR) ruling, which slapped a fresh payment liability of nearly Rs 50,000 crore on the two companies.
A fresh report states that the India venture of Vodafone is in a perilous state. The report hints that the company may shut down its India operations unless the Indian government gives some relaxation to the company on demands for mobile spectrum fees.
On October 30, reports started pouring in that the company is ready to “pack up and leave any day now.” The reason cited by the reports was mainly the mounting losses of the company and dwindling market capitalisation which adversely affected the balance sheet of Vodafone Idea.
A day after some media reports said that Vodafone’s India venture is in a perilous state and could see a shutdown, Vodafone Group’s CEO Nick Read reaffirmed that the company would stay in India and apologised to Indian government saying that his earlier remarks were misquoted by media.
“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”, he added.
Not everything seems to be fine at Vodafone. The mounting losses and loss of almost lakh of subscribers every month has made it difficult for the company to cope with the pressure coming from its rival companies like Airtel and Jio. Adding to the woes, the company along with Airtel has to pay around Rs 80,000 crore to the government. There were even rumours that the company was asking its lenders for debt recast, which the company dismissed saying it made no such requests and that it continued to pay its debt.