Vodafone sinks to 拢1.6bn loss after India court ruling
The firm says the "situation is critical" and could pull out of the country, where it is the largest foreign direct investor.
Tuesday 12 November 2019 12:30, UK
UK-based mobile giant Vodafone sank to a loss of 拢1.6bn after a ruling by India's top court threatens to land it with huge fees and penalties.
The firm 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 court judgment against the telecoms industry relates to a decade-long battle over the calculation of licence and other regulatory fees.
Vodafone said its liability appeared to be at least £3.2bn but warned it "could be substantially higher".
The mobile operator said it may seek a review of the supreme court's decision, which saw it post a loss in the six months to 30 September.
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 chief executive Nick Read said: "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."
Mr Read revealed he had travelled to India with Vodafone's chairman, Gerard Kleisterlee, last month to lay out the company's demands to ministers.
He has asked for a two-year moratorium before any payments are made, lower taxes in the country, the waiving of interest and fines associated with the judgment, and to spread out the fee costs over 10 years.
Mr Read added: "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)."
Elsewhere in the business, Vodafone said its overall revenues over the six-month period had gone up after a return to growth "supported by improvements in South Africa, Spain and Italy, with solid retail performance in Germany and strong commercial acceleration in the UK".
The company's reported revenues rose 0.4% to €21.9 (£18.8bn).
Vodafone also increased its profit guidance to €14.8-€15bn (£12.7bn-£12.9) from €13.8-€14.2bn (£11.9bn-£12.2bn), pointing to the acquisition of Liberty Global's assets in Germany and the sale of its New Zealand business.