Vodafone Idea is losing subscribers at a fast rate in the industry. Vodafone Idea is a new entity which was formed after the merger of Idea Cellular & Vodafone India, which is owned by the British company Vodafone Plc.
There is bad news that the exit of Vodafone Plc from the Indian telecom market. 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 toughfinancial condition of the company prevailing due to unhealthy competition in the Indian telecom industry right now.
Vodafone Idea Subscriber Loss Creates Huge Trouble for the Telecom Industry
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 loss 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
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. 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 within 3 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 immense 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.