Vodafone warns it could quit India over tax row

Vodafone today slashed to zero the near €3 billion (£2.6 billion) value of its vast Indian business as it sent a clear signal in its multibillion dollar dispute with New Delhi that it was prepared to walk away from the country.

The telecoms giant has 300 million customers in India through its Vodafone Idea joint venture. With 30% of the giant market, it has in its 12 years there been India’s biggest foreign investor.

But the business has been crippled by swingeing demands for back taxes which have made the operation untenable.

The Supreme Court of India issued a ruling in October that Vodafone and other established players must pay over $14 billion (£11 billion) to cover unpaid tax, penalties and interest going back to 2003. Vodafone’s share is thought to be around $4 billion.

Chief executive Nick Read today said he had recently flown to the country to demand a compromise: “I told them, if they don’t provide a relief package, we are in the situation of: ‘Is this worth being a going concern?’”

Read, who took over from Vittorio Colao a year ago, said: “I went over there and was very, very clear that we have put multiple billions of dollars into the country over the years but we will not put any further capital in [without acceptable relief].”

Read’s tough words came as he upped the company’s financial forecasts and reported a decent improvement in the results in Europe and Africa. Read is focusing on improving customer service and reducing the number of people leaving for rival operators.

Half-year figures to September 30 saw a return to growth in its revenues, with the UK being a star performer. Read said he wanted to make Vodafone’s services as easy as Amazon’s to order online or through the app.

Part of the forecasts upgrade was due to income from buying rival Liberty’s huge German fibre business.

Revenue increased 0.4% to €21.9 billion but the India writedown pushed it into a loss of €1.9 billion. The interim dividend is 4.5 eurocents.