Vodafone Group denied media reports it was set to pump further funds into its Indian joint venture to cover operational expenses and help pay-off taxes, standing by previous assurances to shareholders it would not spend more cash on the business.
In a statement to Mobile World Live the operator group reiterated it did not intend to contribute further equity into Vodafone Idea, adding media reports stating otherwise were incorrect.
The comments follow a report by The Economic Times (ET) claiming the company was set to infuse $200 million to $225 million into Vodafone Idea. An additional $125 million to $150 million was tipped to be contributed from companies affiliated with joint venture partner Aditya Birla Group, which also denied the plan in a statement to the Indian newspaper.
As part of the original deal to merge Vodafone India and Idea Cellular, a $1.2 billion sum was set aside by the parties to cover historical liabilities which, in November 2019, Vodafone CFO Margherita Della Valle said it had “not taken any provision on”.
In its statement today (16 April) Vodafone noted any further payment made to Vodafone Idea would be from this fund and not new money.
Vodafone CEO Nick Read and Della Valle have both gone on record numerous times to assure shareholders no further funds would be spent on its India JV, with Read stating in the operator’s fiscal H1 2020 financial update its stake in Vodafone Idea carried no value in Vodafone’s share price.
The tough stance on further money being ploughed into the JV comes during a long-running row with authorities on adjusted gross revenue liabilities said to be owed by the company.
Having repeatedly applied to have the amount cut, Vodafone Idea and the country’s other operators lost the latest court case on the issue last month.
Although they failed to get the amount reassessed, payment terms were extended to 20 years, providing some immediate relief for the troubled business which had threatened closure.