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British telecommunications giant Vodafone PLC, which owns a majority stake in Vodafone Idea, attributed its share of the losses related to its Indian arm to adverse Supreme Court lawsuits and decided to value its shares of Vodafone Idea to zero.
In addition, the British operator said it would have an additional potential exposure of Rs 8,400 crore for the contingent liabilities of the Indian telecommunications company.
“There are significant uncertainties regarding Voda Idea’s ability to generate the cash flow it needs to settle, or refinance its liabilities and guarantees as they mature, including those related to the AGR lawsuit,” Vodafone PLC said in a statement.
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In October of last year, the Supreme Court ordered Vodafone Idea to pay Rs 53,000 crore to the government as AGR (adjusted gross income).
“As the Vodafone PLC Group has no obligation to finance Vodafone Idea losses, the group has recognized its share of Vodafone Idea’s estimated losses arising from operating activities and those related to the AGR judgment to an amount that is limited to the remaining book value of Vodafone Idea, which is therefore reduced to zero, ”he said.
The group’s potential exposure is capped at Rs 8.4 billion, and any cash payments or receipts related to these contingent liabilities and possible repayments must have been made or received by Vodafone Idea before the group owes or owes any amount.
“If the book value had been high enough not to restrict the group’s loss portion, then the recognized portion of the losses would have been substantially higher,” he said.
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Having considered the payments made and the refunds received by Vodafone Idea in relation to AGR and other matters, the group has assessed that a cash outflow of € 235 million under the agreement is probable at this time and provided this amount on March 31, 2020.
Vodafone PLC no longer consolidates its previous interest in Vodafone India. Vodafone India was previously valued based on the number of shares the group held in the merged entity and Idea’s share price on August 31, 2018 at Rs 51.50 per share.
The value was also adjusted for income from the sale of the 4.8% stake in Vodafone Idea of the Vodafone Group to the Aditya Birla Group (ABG).
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As a result of the transaction, the group recognized a net loss of € 3.4 billion, including a disposal loss of € 1.27 billion and an exchange loss of € 2 billion, it said.
Regarding the merger of Indus Towers with Bharti Infratel, Vodafone PLC said it has extended the extended suspension date of its agreement to merge Indus Towers and Bharti Infratel until June 24, with each party retaining the right to terminate and withdraw the scheme. of merger on or before June 24.
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