Vodafone wins new Indian spectrum, but withdraws provisional funds meant to end tax feud

Now has 150 million customers sprawled across continent

UK operator Vodafone has had second thoughts about setting aside money for a disputed India tax bill, its decision coming just hours after an announcement that it had secured the rights to new 2G spectrum in 14 of the country’s regions.
Vodafone has been struggling to keep pace with its growing number of Indian customers who have more than doubled from 60 million to 150 million in the past four years, many in rural areas.
But with news today [15th November 2012] that it secured the rights at auction to tranches of the 1800 MHz spectrum at a cost of £138 million, it will now be able to roll out more 2MHz and 1.25MHz services in areas as diverse as Madhya Pradesh, Kashmir and Kerala.
The Indian government has already been criticised for not raising enough money through the spectrum auction, but matters will not be helped by new revelations that Vodafone will no longer be earmarking funds to settle a row with ministers over its takeover of Hutchinson Whampoa’s mobile assets in 2007.
The deal was achieved using a network of offshore companies to minimise capital gains tax, a ploy the Indian government tried to override with retrospective legislation. It led to Vodafone declaring only in September that it would be setting aside £1.35 billion to cover liabilities.
Today, however, its chief financial officer Andy Halford confirmed the operator had had a change of heart and that no provision for settlement would be made, though he did not elaborate further.
The Indian government has yet to react to Vodafone’s U-turn.

About Dave Evans

Dave Evans was a long established commentator on both the IT and cellular industries. His last focus was on share price trends within the sector. He passed away in September [2014].
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