Vodafone could soon pull out of the Indian telecom market after facing serious financial losses. It is also losing subscribers at a massive rate.
Telecom industry which is already reeling under the heavy financial pressure may soon suffer another major blow as there are talks of Vodafone’s possible exit from India due to the company’s mounting losses.
India Today Tech reached out to a Vodafone spokesperson in India. The person, in turn, asked India Today Tech to reach out to the company. We would update the story as and when we receive any update on this.
According to IANS reports, Vodafone is ready to “pack up and leave any day now.” This could be due to the mounting operational losses and declining market capitalisation which is adversely affecting the balance sheet of Vodafone Idea and hindering any fund-raising opportunities for the company. Further, the company is also losing lakhs of subscribers every month.
Vodafone also reported massive losses in this recent financial quarter this year. The company’s stock market value has consistently been declining after the merger of Vodafone’s Indian arm and Aditya Birla Group-owned Idea Cellular. It reported a net loss of Rs 4,067.01 crore in Q1 June 2019 compared with a net loss of Rs 2,757.60 crore in Q1 June 2018.
There were reports few days back that Vodafone Idea has reached out to its creditors for debt recast on which the company issued a clarification on Wednesday. The company said that it continues to pay all its debts as per schedule and has not approached any lender for debt recast. Further, it has called these reports “factually incorrect” and added that it continues to pay the debt as and when dues come.
The financial stress on Vodafone Idea could worsen as the company has been ordered by the Supreme Court to pay about Rs 28,309 crore related to its AGR judgement. The company has said that it could also look at filing a review application on the court’s order if there’s any scope.
“Assuming no relief comes through, the outstanding liability of Rs 28,500 crore (and another potential large demand for past SUC underpayment) would make the already-stressed situation even tougher for Vodafone Idea. The company may need to resort to another large equity raise to fund these payouts. Bharti’s balance sheet is relatively better and while the payouts will increase the leverage ratios, we believe the situation is far more manageable for Bharti,” Kotak Institutional Equities said.