Does Vodafone need to pack its bags?

Vodafone is so deep into difficult waters that it might have to close its doors in India. Reasons? Dwindling market share and profits and of course the AGR ruling by the Supreme Court that asks Vodafone to pay nearly $4billion to the government.

Vodafone was already in a sorry state because of its market being captured by Jio. And the AGR ruling on the top of that cemented the faith of Vodafone. So what is this AGR?

AGR stands for Adjusted Gross Revenue. Basically, these telecom operators have to pay a small portion of its earnings to the government. So, in a way, for every call you make , some money goes to the government. So what’s the problem? The problem is what all to include in this revenue? Telecom operators feel that the government should charge them only for the earnings on calls but the government wants a cut in everything. So if Vodafone sells some of its old telecom towers and buildings, the government wants the cut of this profit as well and not just on what company earns from its cellular operations. A few weeks back The Supreme Court gave its result on the case and sided with the government. As a result, Vodafone has to pay close to 20000 crores to the government as these extra taxes. Vodafone is desperately seeking a bailout from the government - Maybe forego the 20,000 crores fine? Maybe the penalties? Maybe a little extra time? Please?

The government for its part has made it very clear. No. Doing nothing. Pay up or shut shop. It’s all on you.