'Vodafone Idea shut down could impact PM Modi's 5 trillion dollar economy target'

Vodafone Idea Chairman Kumar Mangalam Birla on Friday said that the telecom operator will have to shut shop in India if the government does not provide any relief. Birla's comment has once again raised doubts on Vodafone Idea's future in India without relief from the government. Following Birla's comment, Vodafone Idea shares fell more than 5 per cent on Friday.

Vodafone Idea's exit from India market will have an adverse effect on the country's investment targets and infrastructural growth for the digital economy, says Kazim Rizvi, founder of The Dialogue, an emerging policy think-tank.

"Vodafone’s exit could result in an extremely unlevel playing field. Moreover, it will limit consumer choice, services and could also hurt India’s investment targets, along with government losing out on a revenue stream," Rizvi told Republic World. "We must not forget that Indian telecom sector generates the second-largest private sector investment in infrastructure in India today."

Vodafone or any other major telecom operator shutting down India operations can prevent Prime Minister Narendra Modi from achieving his five trillion economy target. "Exit by any of the players will derail India’s infrastructural growth for the digital economy, thus impacting the five trillion dollar target of PM Modi," Rizvi added.

Vodafone Idea slumps 5 per cent

On Bombay Stock Exchange (BSE), Vodafone Idea shares fell 5.34 per cent to close at Rs 6.92, hitting a low of Rs 6.66 apiece on the BSE, trading 8.89 per cent lower over the previous close. On the National Stock Exchange (NSE), Vodafone Idea shares fell 5.48 per cent to Rs 6.90 a unit, hitting as much low as 8.9 per cent to Rs 6.65.

Last month, Vodafone Group CEO Nick Read had hinted that the mounting debt on Vodafone Idea could result in the company's untimely exit from India market. Raising doubts about Vodafone's future in India without AGR relief, the telecom company chief, in a way, had issued an ultimatum to the government.

In a temporary relief, the centre has already announced two-year spectrum payment moratorium for telecom operators.

The Supreme Court of India upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which has to be paid as license and spectrum fee to the exchequer.

Days after posting a quarterly loss of Rs 50,921 crore amid concerns on its survival, Vodafone Idea recently hiked its tariff rates by up to 50%.

(Main story picture credit: Getty)