Vodafone says carrying value of group's investment in Vodafone Idea is zero

Vodafone Group said on Tuesday (May 16) that the carrying value of the British telecom giant's investment in Vodafone Idea Limited (VIL) is nil. In the notes to its FY23 preliminary results, Vodafone said, "The carrying value of the Group’s investment in VIL is €nil and the Group is recording no further share of losses in respect of VIL."

"The Group's s potential exposure under this mechanism is capped at INR 64 billion (€719 million) following payments made under this mechanism from Vodafone to VIL, in the year ended 31 March 2021, totalling INR 19 billion (€235 million)," the notes added.

As per the terms of the merger between Vodafone India and Idea Cellular in 2017, the parties agreed on a mechanism for payments between the group and VIL pursuant to the difference between the crystallisation of certain identified contingent liabilities in relation to legal, regulatory, and tax and other matters, and refunds relating to Vodafone India and Idea Cellular.

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Vodafone said on Tuesday that cash payments or cash receipts relating to the above matters must have been made or received by VIL before any amount becomes due from or owed to the Group

The telecom giant pointed out that VIL remains in need of additional liquidity support from its lenders and intends to raise additional funding.

"There are significant uncertainties in relation to VIL’s ability to make payments in relation to any remaining liabilities covered by the mechanism and no further cash payments are considered probable from the Group as of 31 March 2023," it further said.

In its preliminary results, Vodafone also announced that it would be cutting 11,000 jobs over the next three years, the biggest layoff in its history. Chief Executive Officer Della

Vella said that Vodafone's performance had not been good enough, and to consistently deliver, the company must change.

Vella said that the organisation would be simplified, cutting out complexity to regain its competitiveness. "We will reallocate resources to deliver the quality service our customers expect and drive further growth from the unique position of Vodafone Business,” she added.

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