Vodafone Sells Maltese Division to Monaco Telecom for $250-Million Euros
Vodafone has not been having a great financial year. Their various disputes in India over taxes, a small slowdown in overall profits, and the closure of over 1,000 store locations has put the company in a somewhat tenuous financial state. This could be the reasoning behind their recent $250E sale of their Maltese division to company Monaco Telecom. The sale was unexpected by many investors, and is expected to close quite quickly in the first quarter of 2020. The sale comes after a string of bad luck for the British telecommunications company, whose stock is miraculously up at this point in time. Despite all the problems that they’ve been going through, they’re still trying to keep things going. On the side of Monaco Telecom, it’s an unclear future at this point. It’s unclear whether Malta’s company formation process will bring either harm or good to their newly acquired company.
Vodafone Closing More Stores
Retail is in trouble all over the world. With the advent of the Internet and an intricate and ever-expanding global transportation network, it’s easier than ever to order something to your home. It’s estimated that roughly 40% of Vodafone’s sales have been digital, which is simply eliminating the need for brick & mortar locations. However, the company outwardly doesn’t look like it’s worried. Founded in 1982, Vodafone’s senior position in the telecommunications field has given it time to build a vast foundation and establish deep roots.
While they will have to spend in order to adjust to the changing global market, it doesn’t look like the company will be in deep financial trouble. “If you believe that 40 percent of your transactions are going to be digital, then how does that impact why someone goes to a store. The journeys and the purpose of the store changes,” said Group Chief Executive Nick Read, before adding that Vodafone planned to close down 15% of their 7,700 European stores. He went on to say, “[That] means that we will have more ‘experience’ stores, less standard format stores [and] more convenience, and kiosk and click-to-collect stores.” Besides their presence in Europe being diminished, their Maltese location has been completely dropped. While they were able to stabilize financially with the $250E sale to Monaco Telecom, it’s unclear whether the move was made out of desperation. It’s possible that Malta’s company formation process was simply too much of a hassle for the British company. After all, it’s been some time since a company that was of British origin was eyes with kind eyes by the people of Southeast Asia. After a long history of colonization and broken promises, British businessmen are viewed in Malta in the same way carpetbaggers were viewed in the American South.
Company Considering Withdrawal From India
After leaving Malta, it seems that Vodafone is trying to consolidate their holdings. After a long time battling India’s taxes, Vodafone seems to now be considering leaving the country altogether. They have warned the Indian government multiple times that if they weren’t offered a series of tax remedies, they would withdraw their presence from the nation. India, however, is holding firm as of yet. This refusal to accept any further terms comes after Nick Read travelled to India with a long list of demands in hand. This list included a reduction in taxes on the finance sector, the waiving of interest fees, and a two year long moratorium on spectrum payments.
The good news for Vodafone is that there doesn’t seem to be any bad blood between India and the company itself. The company has poured billions into India as a foreign investor. The problem seems to lie more with India’s relationship with the telecommunications industry as a whole. India changing their mind on how to charge telecommunications companies for using airwaves has cost Vodafone almost two billion pounds in the last six months, and things don’t seem to be improving there. However, Vodafone hasn’t left the country yet, so they seem to be holding out hope that the Indian government will meet their demands.
Whether it’s Malta’s company formation process, increased airwave costs in India, or a diminishing number of European shoppers, Vodafone is standing strong. This year has put an indisputable strain on the company, but they seem to be consolidating enough to a point of security. However, much depends on how their foreign relations are able to hold up. If there were to be some sort of scandal or slip-up to be exposed, the company’s foreign prospects could be dead & done. Until that happens, they just might be in the clear.