Last checked at 
* India Supreme Court ruling latest blow for beleaguered
sector
* Vodafone upgrades full-year core earnings forecast
* Organic service revenue returns to growth in Q2
* Shares up 1.3%
*
(Adds further details, updates shares)
By Paul Sandle
LONDON, Nov 12 (Reuters) - Vodafone said its future
in India could be in doubt unless the government stopped hitting
operators with higher taxes and charges, after a court judgment
over licence fees resulted in a 1.9 billion euro group loss in
its first half.
Chief Executive Nick Read said India, where Vodafone formed
a joint venture with Idea Cellular in 2018, had been
"a very challenging situation for a long time", but Vodafone
Idea still had 300 million customers, equating to a 30% share of
the sizable market.
"Financially there's been a heavy burden through
unsupportive regulation, excessive taxes and on top of that we
got the negative supreme court decision," he said on Tuesday.
Vodafone had asked the government for a relief package
comprising a two-year moratorium on spectrum payments, lower
licence fees and taxes and the waiving of interest and penalties
on the Supreme Court case, which centred on regulatory fees.
Asked if it made sense for Vodafone to remain in India
without such a relief package, he said: "It's fair to say it's a
very critical situation."
India's top court upheld a demand from the country's
telecoms department for $13 billion in overdue levies and
interest last month, hitting the shares of both Vodafone Idea
and rival Bharti Airtel.
Vodafone has clashed with Indian authorities over tax and
regulatory issues ever since it entered the country with a $11
billion deal to buy 67% of Hutchison Essar in 2007.
The arrival of new entrant Reliance Jio Infocomm in 2016
added to Vodafone's problems by sparking a brutal price war.
It responded by combining its operations with Idea Cellular,
a deal that closed in 2018.
Read said Vodafone was not committing any more equity to
India and the country effectively contributed zero value to the
company's share price. As a result of the ruling, it has written
down the value of its stake in the joint venture to zero.
It also owns a stake in Indian tower operator Indus Towers,
along with Bharti Airtel.
Vodafone's shares were up 1.7% at 163 pence at 1040 GMT as
investors focused on an upgrade to its earnings forecast rather
than India.
UPGRADED FORECAST
The world's second largest mobile operator reported
improving organic revenue growth with signs of improvement in
Spain and Italy and as it integrates a German cable acquisition.
It said organic service revenue rose 0.3% in the first half,
as it returned to growth in the second quarter, while organic
core earnings rose 1.4%.
It increased its forecast for adjusted core earnings to
14.8-15.0 billion euros from its previous forecast of 13.8-14.2
billion euros, but said India and lower cash flows following the
sale of assets in New Zealand meant free cash flow would be
"around" 5.4 billion euros, rather than the "at least" 5.4
billion euros previously forecast.
Apart from India, Read said he was pleased with progress.
"This is reflected in our return to top-line growth in the
second quarter, which we expect to build upon in the second half
of the year in both Europe and Africa," he said.
Read cut Vodafone's dividend for the first time in May after
tough market conditions and a need to invest in its networks and
airwaves caused him to backtrack on his pledge not to reduce the
payout.
(Editing by Kate Holton and Kirsten Donovan)
