Chakar The Great
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NEW DELHI: Vodafone Group on Tuesday said that there are ‘significant uncertainties’ around Vodafone Idea Limited’s ability to generate the cash flow to settle its guarantees and liabilities, including dues related to license fee emerging from the latest Supreme Court AGR judgement. The Group's chief executive Nick Read termed VIL's situations as critical. "It's fair to say that it is a critical situation...the Indian government understands the issue and the urgency...financially there's been a heavy burden through unsupportive regulation, excessive taxes and on top of that we got the negative supreme court decision," Read was quoted as saying by Reuters on Tuesday. “Having considered the possible future developments for VIL, Vodafone Group said that it has concluded that there are significant uncertainties in relation to VIL’s ability to settle the liabilities relating to the AGR judgment and has not assessed a cash outflow under the agreement to be probable at this time.
The Group’s potential exposure is capped at Rs 84 billion or €1.1 billion, it added. “…VIL is seeking relief from the Indian Government, including, but not limited to, granting a waiver of interest and penalties relating to the AGR judgement,” the Group said in a statement. Read also Vodafone Idea yet to take a call on filing review petition in SC on AGR order Kumar Mangalam Birla, Vodafone Idea executives meet Cabinet Secretary ET recently reported that Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower license fee and taxes and waiving of interest and penalties on the Supreme Court case.
The Group made a loss of €1.9 billion, primarily reflecting a loss at Vodafone Idea following an adverse legal judgement against the industry by the Supreme Court, partially offset by a profit on the disposal of Vodafone New Zealand. Vodafone Group’s recorded share of VIL’s resulting losses has been restricted to the amount that reduces the Group’s carrying value in VIL to nil at 30 September 2019. The Group’s carrying value was €1,392 million at 31 March 2019 and in May 2019 the Group invested €1,410 million via a rights issue. Vodafone Group has also made it clear that any future payments to VIL as result of its merger agreement with Aditya Birla Group “would only be made after satisfaction of contractual conditions.” As part of the agreement to merge Vodafone India and Idea Cellular, the parties agreed a mechanism for payments between the Group and VIL pursuant to the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, including the AGR case, and refunds relating to Vodafone India and Idea Cellular.
In October, the Supreme Court ruled against the industry in a dispute over the calculation of license and other regulatory fees, and Vodafone Idea is now liable to pay around Rs 40,000 crore. “As the Group has no obligation to fund VIL losses, the Group has recognised its share of estimated Vodafone Idea Limited (“VIL”) losses arising from both its operating activities and those in relation to the AGR judgement to an amount that is limited to the remaining carrying value of VIL, which is therefore reduced to €nil,” Vodafone Group said. Vodafone Group also added that the value of its 42% shareholding in Indus Towers is dependent on the income generated by the latter from tower rentals to major customers, including VIL. “Any inability of these major customers to pay such amounts in the future may result in an impairment in the carrying value of the Group’s investment in Indus,” it added. The investment till September 30, 2019, stood at €0.6 billion.
Source: https://telecom.economictimes.india...vils-inability-to-generate-cash-flow/72022689
The Group’s potential exposure is capped at Rs 84 billion or €1.1 billion, it added. “…VIL is seeking relief from the Indian Government, including, but not limited to, granting a waiver of interest and penalties relating to the AGR judgement,” the Group said in a statement. Read also Vodafone Idea yet to take a call on filing review petition in SC on AGR order Kumar Mangalam Birla, Vodafone Idea executives meet Cabinet Secretary ET recently reported that Vodafone had asked the government for a relief package comprising a two-year moratorium on spectrum payments, lower license fee and taxes and waiving of interest and penalties on the Supreme Court case.
The Group made a loss of €1.9 billion, primarily reflecting a loss at Vodafone Idea following an adverse legal judgement against the industry by the Supreme Court, partially offset by a profit on the disposal of Vodafone New Zealand. Vodafone Group’s recorded share of VIL’s resulting losses has been restricted to the amount that reduces the Group’s carrying value in VIL to nil at 30 September 2019. The Group’s carrying value was €1,392 million at 31 March 2019 and in May 2019 the Group invested €1,410 million via a rights issue. Vodafone Group has also made it clear that any future payments to VIL as result of its merger agreement with Aditya Birla Group “would only be made after satisfaction of contractual conditions.” As part of the agreement to merge Vodafone India and Idea Cellular, the parties agreed a mechanism for payments between the Group and VIL pursuant to the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, tax and other matters, including the AGR case, and refunds relating to Vodafone India and Idea Cellular.
In October, the Supreme Court ruled against the industry in a dispute over the calculation of license and other regulatory fees, and Vodafone Idea is now liable to pay around Rs 40,000 crore. “As the Group has no obligation to fund VIL losses, the Group has recognised its share of estimated Vodafone Idea Limited (“VIL”) losses arising from both its operating activities and those in relation to the AGR judgement to an amount that is limited to the remaining carrying value of VIL, which is therefore reduced to €nil,” Vodafone Group said. Vodafone Group also added that the value of its 42% shareholding in Indus Towers is dependent on the income generated by the latter from tower rentals to major customers, including VIL. “Any inability of these major customers to pay such amounts in the future may result in an impairment in the carrying value of the Group’s investment in Indus,” it added. The investment till September 30, 2019, stood at €0.6 billion.
Source: https://telecom.economictimes.india...vils-inability-to-generate-cash-flow/72022689
