India Mulls Vodafone Dues Resolution to Strengthen UK Relations

As the government looks to improve relations with the UK, India is thinking of settling its long-standing demand for billions of dollars in past-due fees from Vodafone Group Plc’s struggling local business once and for all, according to people familiar with the situation.

As per various media reports, a compromise on the principle and a waiver of interest and penalties might resolve the financial issue worth around 2 trillion rupees ($22.5 billion). According to the reports, officials are working on the framework and considering ways to make sure that any agreement won’t lead to legal challenges from other telecom companies that owe money.

Vodafone Idea Ltd. has been plagued by the arrears and hasn’t posted a quarterly profit since 2016. According to the people, a settlement might open the door for the third-largest telecom provider in India to draw in new investors.

Free Trade Agreement Between India and UK

New Delhi will especially profit from strengthening connections between the UK and India, which just inked a free trade agreement, at a time when ties with the US have worsened following President Donald Trump’s return to the White House. The argument for giving priority to already-thriving partnerships is further supported by the fact that attempts to restore relations with neighbouring China are barely getting started.

Reports further stated that the endeavour is even more urgent because British Prime Minister Keir Starmer is expected to visit India this week. The local branch of the British company and Idea Cellular Ltd., owned by billionaire Kumar Mangalam Birla, merged to establish Vodafone Idea.

By strengthening the UK’s position as a partner, its revival would benefit India internationally and assist in maintaining competition in the nation’s telecom industry.

Indian Government’s Strong Support to Vodafone

Through a debt-to-equity swap this year, the Indian government acquired a 49% stake in Vodafone Idea and has openly recognised the need for a solution. Last month, a government lawyer informed the Supreme Court that since public funds are already invested in the carrier, “some solution may be required.”

India’s yearly adjusted gross revenue (AGR), of which a portion is paid in licence and spectrum fees, is the subject of the dispute. Even though telecom companies have been contesting the approach for years, if the government changes its position, the court might be more accommodating this time.

Since the Tata Group’s wireless carrier and Sunil Mittal’s Bharti Airtel Ltd. have also been requesting relief, officials will undoubtedly need to make sure that all telecom operators receive equitable treatment during the AGR relief process. To ensure that Vodafone Idea isn’t given an unfair edge over competitors, one idea being discussed is to ask all operators to offer revival plans in exchange for any concessions.