Vodafone Idea still holding out for government help

Vodafone Idea remains touchingly optimistic that the Indian government will come through with a telecoms reform package to keep its business afloat.

Mary Lennighan

September 8, 2021

2 Min Read
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Vodafone Idea remains touchingly optimistic that the Indian government will come through with a telecoms reform package to keep its business afloat.

Himanshu Kapania, Chairman of the troubled Indian mobile operator, declared himself to be “hopeful” of government support in a letter to shareholders published this week.

“Your Company believes the government recognizes the criticality of the sector and the importance of retaining healthy competition amongst private sector operators,” Kapania said in the letter introducing the telco’s latest annual report for the 2020-2021 financial year.

Highlighting the importance of Vodafone Idea’s mobile network covering 1.2 billion people for the government’s mission to digitalise India, Kapania stuck to the telco’s story that the whole market needs help. That is, of course, true, to a certain extent…

“As the industry continues to remain under unsustainable financial duress, your Company is hopeful that the government will provide the necessary support to address all structural issues faced by the sector,” the chairman wrote. “Your Company with a history of providing 25 years of mobile services to the country is hopeful that the government will support its efforts to generate reasonable returns on their massive investments.”

While the plea was doubtless written some time ago, its publication coincided with a rare share price rally for Vodafone Idea, driven by reports in the local press that the Indian cabinet was set to make a decision on a possible relief package for the whole industry. There has long been talk of the state easing up on spectrum payments and adjusted gross revenue (AGR) dues, amongst other things, which would benefit all players in a market still characterised by high costs and low ARPUs. Naturally, Vodafone Idea would be the biggest beneficiary, given its precarious financial position, hefty debts, and ongoing bid to have the government recalculate the AGRs it owes. On that last point, Vodafone is awaiting the outcome of a further appeal against a Supreme Court ruling filed last month.

Kapania’s optimism appears to have been misplaced though. Reuters cited an unnamed government source as saying that the cabinet did not discuss the telecoms relief proposals as predicted on Wednesday. The source did not give a reason for the lack of debate on the issue, nor did the newswire indicate what the next move might be.

One assumes that the state will make a decision sooner or later, but it’s never wise to speculate on timeframes when it comes to the Indian telecoms sector. It is probably equally unwise to predict how much longer Vodafone Idea can carry on like this.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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