Struggling Vodafone Idea Gets Bombay High Court's Relief, Income Tax Dept Ordered To Refund Rs 1,128 Crore

Vodafone Idea's shares experienced a 2.5 per cent increase during early trading on Thursday (9 November). This positive movement was a result of the Bombay High Court's directive to the income-tax department, instructing them to refund Rs 1,128 crore in dues that were paid by the telecom operator in 2016-17.

The assessment order against the telecom major was declared "unsustainable and time-barred" by the court. This order was issued by an income tax officer on 31 August to Vodafone Idea, two years after the telecom major received directions from a dispute resolution panel.

According to MoneyControl, Vodafone Idea disputed the order, claiming that the assessing officer did not provide a final decision within the required 30-day timeframe.

The assessing officer was also advised by the court to undergo an inquiry due to their failure to comply with the legal requirements and their lack of diligence in carrying out their duties.

In September 2023, Vodafone Idea reported consolidated net sales of Rs 10,716.30 crore, showing a year-on-year increase of 0.96 per cent.

In its Q2 earnings report, the telecom operator disclosed a widened net loss of Rs 8,737.9 crore compared to Rs 7,595.5 crore in the same quarter of the previous year.

The revenue for the year remained stable at Rs 10,716.3 crore, compared to Rs 10,614.6 crore in the same period last year. This was attributed to a favorable mix of subscribers and an increase in 4G subscribers.

In Q2, the company saw a 140 basis point increase in its EBITDA margin, reaching 40 percent. The average revenue per user (ARPU) per month also improved to Rs 142 from Rs 131 in the previous year.

Additionally, the ARPU increased from the previous quarter's Rs 139. However, it is important to note that the ARPU still remains lower than its competitors Jio and Bharti Airtel.

During the past year, the company successfully decreased its net debt by Rs 7,220 crore, resulting in a current total of Rs 2,12,660 crore at the end of the second quarter.