Troubled telecom company Vodafone Idea i.e. VIL (Vodafone Idea Limited) has expressed concern over the industry’s finance crisis in its latest annual report. The company has said that a solution to this problem is necessary for the industry to survive. Along with this, the company has expressed hope that the government will provide necessary support to resolve all the ‘structural issues’ in the area.
The company’s chairman Himanshu Kapania in a letter addressed to the shareholders, referring to the ongoing challenges in the operation, has said that during the last financial year 2020-21, the prices were not sustainable in the market. Apart from this, there was also the challenge of a lot of competition. Himanshu Kapania expressed hope that the government will provide support to the industry for a reasonable return on investment. Kapania was elected non-executive chairman by VIL’s board of directors after Kumar Mangalam Birla resigned in early August.
Himanshu Kapania said that the industry is constantly in a financial crisis. “Your company hopes that the government will provide necessary support to the industry to resolve all structural issues.” He said, “VIL has been providing mobile service in the country for 25 years. The company expects the government to provide support for their reasonable return on their huge investments.
Kapania said that the operating environment remained challenging in 2020-21 due to excessive competition and non-durable prices. He said that the challenges of operation remain but due to increasing digital penetration, there are tremendous opportunities before the telecom industry. The demand for digital has increased during the Corona epidemic. Kapania said, “We believe that the government will take steps to maintain a tough competition among the operators of the private sector.”
If the trouble of Voda-Idea increases, then others will also have trouble
Rating agency Icra has said that the financial crisis of Vodafone Idea Limited due to rising losses and debt is likely to affect its financial lenders and in such a situation, the government’s support for this telecom company is very important. This support could be in the form of deferment of spectrum dues, reduction in cess, reduction in interest rates and other relief measures.
Icra said in a statement, “Vodafone Idea is in financial trouble, as evidenced by the widening deficit and increasing debt, which may affect its financial lenders as well as the government. Apart from this, it will also have an impact on the employees, customers and related industries including the tower.
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