Vodafone Exit From Indian Market Now in Talks as Merged Company Continues to Lose Subscribers

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When we speak of the Indian telecom industry, there are only three telecom operators which come to anyone’s mind. These are Vodafone Idea, Reliance Jio and Bharti Airtel. Out of these, Vodafone Idea is a new entity which was formed after the merger of Idea Cellular and Vodafone India, which is owned by the British company Vodafone Plc. However, there is a new shocking piece of news doing the rounds of the internet and it happens to be about the exit of Vodafone Plc from the Indian telecom scene altogether. This could mean a potential demerger for Vodafone Idea in the coming time and would mean another big hiccup for the telecom industry. The exit of Vodafone Plc could be because of the financial condition of the company and the tough conditions which are prevailing in the Indian telecom industry right now.

Vodafone Idea Subscriber Loss Creates Troubled Waters for the Telco

It is worth noting that a questionnaire sent to Vodafone Idea by IANS was deflected to Ben Padovan, Group Head of Corporate Communications, Vodafone Plc. Hence, signalling that Vodafone Plc could be on the verge of making a crucial decision which would decide the fate of the telecom company. As per some of the officials in the telecom industry, Vodafone Plc is now ready to “pack up and leave any day” and it could be because of the mounting operational losses. The company has been facing most churn of subscribers in the industry followed next by Bharti Airtel. The subscriber loss for Vodafone Idea has been in lakhs per month this is in addition to the falling market cap of the company, which is hurting the balance sheets for the telecom operator. Not only this, but this is also hurting any capital raising opportunities for Vodafone Idea as well.

Vodafone Idea Dismisses Debt Recast

A few days back, there were also reports that Vodafone Idea had approached its creditors for a debt recast on which it has issued a clarification. Vodafone Idea said that the reports which claim that the company approached its creditors for a debt recast a factually incorrect and baseless. The company further added that it has not approached its creditors or asked for the reworking of payment terms. It is also worth noting that the recent Supreme Court order on the definition of Adjusted Gross Revenue (AGR) has also hurt the telecom operator. After the verdict was passed, Vodafone Idea is now required to pay Rs 23,309 crore in dues. The telecom operator also has to pay this amount only in a matter of three months. After the Supreme Court decision, the Vodafone Idea share took a sharp dip to hit its 52-week low, which was Rs 3.66. The market cap of the company currently stands at Rs 11,091 crore, whereas the investments in the company run into billions. After the verdict of the Supreme Court, Vodafone Idea has already shown its disappointment.

Telco Asks for Relief from the Government

The company, in its statement, had also said that the new judgement from the Supreme Court has deep implications for the industry which is already under heavy financial burden. It said that billions of dollars have been spent on creating high-quality networks across India, but the new decision puts undue pressure on the two telecom companies whereas, the others have exited the telecom space altogether. The company also said that it would reach out to the government to ask it to mitigate some of the pressure that has fallen on to the shoulders of the two major telecom companies. The company has also hit another roadblock with the merger of Indus Towers with Bharti Infratel not happening anytime soon and the merger not meeting the FDI regulations before the deadline of October 24.

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Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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