Vodafone suffers £1.6bn loss following Indian court ruling
British mobile giant Vodafone has suffered a £1.6bn loss after a ruling by India’s top court. The company has described it as a critical situation and warned it could pull out of the country, where it is the largest foreign direct investor.
The Indian court judgment against Vodafone relates to a decade-long battle over the licence and other regulatory fees.
Announcing its results for the period, the company said: “In October the Supreme Court in India ruled against the industry in a dispute over the calculation of licence and other regulatory fees, and Vodafone Idea is now liable for very substantial demands made by the Department of Telecommunications in relation to these fees. We are actively engaging with the government to seek financial relief for Vodafone Idea.”
Vodafone’s CEO Nick Read commented: “The situation is critical. I think the government are left in no doubt on our position. We are India’s largest foreign direct investment investor and I think there’s a moment where you have to say we’ve been commercially successful and our brand is strong. What we need is a supportive regulatory environment and prices that are sustainable. It’s been a very challenging situation for a long time and, if you look at the share price in India, it is effectively has zero value.”
Read also revealed that the company has asked for a two-year moratorium before Vodafone has to pay any fees. He has also requested that any payments be spread out over a 10-year period. The ruling has soured the relationship, and led to Vodafone threatening to pull out of the country.
Read said: “We’ve committed a lot of capital to India and we’ve made a decision we will not put further capital in until the issue is resolved.”