Telecom circles abuzz: Vodafone to exit India
Business | October 30, 2019 16:23 ISTThe telecom regulatory world is abuzz with feverish talk that the imperiled telecom operator, Vodafone, is ready to exit its India operations.
The telecom regulatory world is abuzz with feverish talk that the imperiled telecom operator, Vodafone, is ready to exit its India operations.
As the telecom sector stares at a massive payout following a Supreme Court order, the government has created a Committee of Secretaries to work out a financial bailout package that may include lowering of spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data.
The Supreme Court recently ruled that telcos have to pay approximately Rs 92,000 crore to Department of Telecommunications (DoT) as revenue share on AGR computation.
Facing over Rs 21,000 crore liability in interest and penalty alone after a Supreme Court ruling on the definition of telecom revenues, Vodafone Idea on Friday said it will approach the government for relief, including a waiver of interest and penalties.
The fall comes on the back of a Supreme Court order on Thursday asking telcos, including Bharti Airtel and Vodafone-Idea, to pay the government as much as Rs 92,000 crore in dues, which includes penalties and interest
In April 2018, Bharti Airtel, Idea Cellular and Vodafone Group had announced an agreement for the merger of Indus Towers and Bharti Infratel to create the largest mobile tower operator in the world outside China. It will have over 163,000 towers across 22 telecom service areas in India.
The government, in March last year, enhanced the number of annual instalments for spectrum payment from 10 to 16 years to provide a breather to the debt-laden telecom sector.
Shares of telecom companies on Thursday rose up to 6 per cent in the wake of Reliance Jio deciding to levy call connect charges on customers, a move that is likely to be followed by rivals.
According to the report, the tax cut means at the most that Bharti Airtel (Bharti) will see a small benefit on cashflow basis in the near term.
A recent Bank of America Merril Lynch (BofA-ML) report said it believed Vodafone Idea Ltd (VIL) would exit the six circles in C-Circle where it has been continuously losing revenue market share with share below 20 per cent. The report has identified Himachal Pradesh, Bihar, Odisha, Jammu and Kashmir, North East and Assam from where VIL may exit.
Mukesh Ambani-led Reliance Jio pipped Bharti Airtel and Vodafone Idea in April-June as top revenue earner from telecom services at Rs 10,900 crore within three years of commencing commercial operations, according to the latest financial data released by telecom regulator Trai. This assumes significance as Reliance Jio stormed into the highly-competitive telecom sector in September 2016 with its disruptive voice and data offerings, while Bharti Airtel had launched its services way back in 1995.
The unabated losses at Vodafone-Idea are eroding the value of other Aditya Birla Group firms, whose combined m-cap declined by a whopping Rs 21,431 crore on August 20, days after the quarterly results of the telecom arm were announced on July 29.
Ravinder Takkar, currently Vodafone Group’s representative in India, will be appointed as the new MD and CEO with immediate effect, the company said in a statement.
For Vodafone-Idea, the recovery hinges on network integration, cash position say analysts and the telco is well placed to realize full OpEx synergy of Rs 8,400 crore by June 2020 says its management.
Shares of Vodafone Idea Ltd on Monday cracked over 29 per cent after the company's first quarter revenue as well as subscriber base declined.
Vodafone faced the highest penalty of Rs 1.56 crore during three quarters to June 2018 for non-compliance with the benchmarks for various quality of service parameters including call drop, Parliament was informed Thursday.
The Digital Communications Commission, the telecom department's apex decision-making body, on Wednesday approved imposing cumulative penalty of Rs 3,050 crore on Bharti Airtel and Vodafone Idea for not providing points of interconnection to Reliance Jio.
While Digital Communications Commission (DCC) approved imposing penalty on the companies, it disagreed with a proposal of one of the secretaries to fine Reliance Jio as it "too failed to deliver quality service to customers".
Mobile subscriber base of Vodafone Idea and Bharti Airtel declined by nearly 14.5 million and 15.1 million respectively, totalling nearly 30 million subscribers as of March over the previous month, while Reliance Jio added 9.4 million users, according to the TRAI data.
According to the company, over 2,600 sites are now operational and connecting people in these areas.
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