Vodafone in India provides 2G and 3G services
The Department of Telecommunications (DoT) has initiated discussions with banks to address financial stress in the telecom sector, particularly Vodafone Idea Ltd (VIL) that urgently requires fund infusion to stay afloat. There was a meeting of DOT officials and senior bankers on Friday on the issue of Vodafone, sources said, adding that banks have been asked to look for a solution within the prudential guidelines. According to sources, senior officials from the country's biggest lenders State Bank of India and Bank of Baroda were also present among others in the meeting. More such meetings are expected to take place in the coming days, they said.
The sale of Essar Oil was India's biggest deleveraging exercise undertaken by any debt-heavy group
In effect, companies which put their money in telecom in India would have done much better to keep the cash in bank and earn interest.
The question mark over Vodafone Idea's survival is gone after the government's telecom package, managing director and chief executive officer Ravinder Takkar said in an interaction recently. The extended moratorium for spectrum payments and adjusted gross revenue (AGR) dues has indeed ensured that Vodafone Idea survives, at least for the time being, but questions remain. Answers to those questions may determine the future of Vodafone Idea and its power to stay in a difficult telecom market in the coming years.
While it was technically not possible to block the deal, the tax department could resort to arm-twisting.
"If we are not getting anything then I think it is end of story for Vodafone Idea," Kumar Mangalam Birla said at the HT Leadership Summit when asked about the future of Vodafone Idea in absence of a government relief on payment of Rs 53,038 crore dues.
In 2013-14, India became the third-largest contributor to Vodafone Group's service revenue and operating free cash flow.
Globally, the focus has moved back to India, especially in terms of telecom assets. Vodafone Idea, with some 300 million customers, continues to be attractive with shares available at a low price.
In order to determine whether this would be sound strategy for them, one needs to look at two issues: One, on the alliances being built globally between telcos, on one hand, and cloud service firms, on the other, especially with the advent of 5G; and two, how their business strategies in India will blend into with such a deal.
This fresh case pertains to the tax assessment done by the I-T department for the year 2009-10.
In the broader market, the BSE Midcap index bucked the trend to gain 0.3%
To bring clarity, the department clearly defines terms such as promoter and competitor.
Following the October 24 Supreme Court order, the department of telecom estimated that the total liability of 15 telecom companies, including penalties and interest, would be Rs 1.47 lakh crore.
The high court court on Thursday accepted Nokia's appeal to release its local factory after its seizure by authorities in a tax dispute, removing a hurdle for the sale of the company's mobile phone business to Microsoft.
Granted 6-month relief, subject to interim payments and guarantee, on Rs 3,700-cr demand for alleged transfer pricing in FY09.
At $12-bn valuation, this will be India's largest FDI; deal to be announced on Saturday, says Dev Chatterjee.
Country accounts for 38% of telco's global user base, 10% of total revenue
More companies with unconventional business models to get into messy legal hassles in India.
