Vodafone Idea (Vi) has got another relief of Rs 408 crore. The Income Tax Appellate Tribunal’s (ITAT) Mumbai bench has allowed the telco’s claim for depreciation on the spectrum fee it paid during FY15, reports ET Telecom.
Vodafone India, before it merged with Idea Cellular, had declared a total income of more than Rs 4,350 crore for the assessment year 2015-16 and claimed depreciation of Rs 1,628.48 crore at 25% on the spectrum fee it had paid. Under Section 32 of the Income Tax Act, Vodafone India had treated the spectrum as an ‘intangible asset’.
Vodafone Idea Needs Funding as Fast as Possible
Vodafone Idea (Vi) needs funding as fast as possible. The third-largest telco in the country isn’t making a lot of difference for the customers when it comes to offering network coverage. A lot of help from the government has already come, and the telco’s liabilities have also been reduced, with a large part of the dues converting into equity for the government.
The individual promoter holdings are less than that of the government now. The Government of India (GoI) has declared that it doesn’t want to convert Vi into a public sector unit (PSU) and is only looking for things to stabilise so that it can sell its stake in the company.
Airtel recently received funding from Google, which would make Vodafone Idea feel more unsettling. To meet the capex levels of Jio and Airtel, Vi needs funding, without which the telco will fail to improve its 4G networks aggressively. If that happens, more 4G users will port out to other telcos.
Vi also requires another prepaid tariff hike which is expected to come either in 2022 or 2023. Again, with steeply rising prices, the telco would need to invest in its 4G networks to justify the amount of money that customers are paying for its services. The promoters really need to dig in here and offer monetary support to the telco.