Of late the Indian telecom sector is abuzz with rumors that UK based telecom giant Vodafone may exit its India operations. Vodafone Idea Limited (VIL), India’s third-biggest telecom operator with more than 370 million subscribers is facing an existential crisis as it reported a massive net loss of Rs 509.22 billion for the July-September quarter of 2019, the highest-ever quarterly loss by an Indian company. The huge loss came as the company made a provision for the Supreme Court’s ruling on payment of average gross revenue (AGR) dues of Rs 256.8 billion.
VIL, a venture between the local arm of Vodafone Group and Aditya Birla Group owned Idea Cellular has been losing subscribers and reporting losses every quarter since the two companies announced their merger in 2017. Moreover the arrival of new entrant Reliance Jio Infocomm in 2016 added to Vodafone’s problems as it led to a brutal price war. Financially too, there has been a heavy burden on VIL through unsupportive regulation and excessive taxes.
However, Vodafone strongly denied rumors of exiting India as baseless and malicious. The company said its future in India could be in dark unless the government eases off on demands on spectrum payments and lowers license fees and taxes.
Intense competition, high operating costs, dwindling market share and non-existent profits…VIL has a long list of problems to resolve!