You might have got the impression from recent news reports that higher tariff rates and a potential easing of AGR repayment terms have left Vodafone Idea and its UK parent more relaxed about the Indian operator’s future. You would be wrong.
Vodafone Group CEO Nick Read has again entered the fray. He indicated, during a recent earnings call, that Vodafone Idea has sought a waiver of interest and penalties on the billions of dollars of adjusted gross revenue (AGR) dues demanded after October’s Supreme Court decision widened the definition of AGR. Vodafone Idea also wants to pay the principal over 10 years with a two-year moratorium.
The lowering of licence fees and taxes, and the setting of a floor price to eliminate predatory pricing are also part of the Indian operator’s wishlist to the government.
But that’s not all. Read also referred to a potential cash injection for Vodafone Idea from selling its stake in the merged Indus Towers-Bharti Infratel deal. This will not be forthcoming without government approval of the merger. That approval has been delayed more than once.
Whatever happens, Read indicated, no more fresh capital will be put into the troubled Indian operator. For good measure, he again described the situation in India as critical.
The government has so far refused to provide relief on the AGR dues unless directed by the Supreme Court. However, a modification petition, asking the Supreme Court to allow negotiations with the Department of Telecommunications (DoT) on timelines for payment, has yet to be heard.
Read's concerns have received at least some support from one of Vodafone Idea’s rivals. Bharti Airtel chief executive Gopal Vittal has argued that Vodafone Idea’s survival is critical and that India needs to remain a three-player market.
While the potential hit, in terms of investment, job losses and reputation, of a major player’s exit would be likely to worry the government, for now all parties will probably have to wait for the Supreme Court ruling.