Vodafone probes potential Ono tax fraud

Vodafone continues to be dogged by taxation problems as the operator confirmed it is probing a potential fraud at Spanish unit Ono just weeks after finally making progress in a long-running tax dispute in India.

The UK-headquartered group said it is investigating reports that Ono failed to declare value-added tax (VAT) on the sale of international calling minutes prior to being acquired by Vodafone in July. The relevant Ono division generated at least €200 million ($253 million) in revenue, Bloomberg reported citing an El Pais article.

Three of four Ono managers who oversaw the sale to Vodafone have been suspended, El Pais added.

In a statement emailed to FierceWireless:Europe, a Vodafone spokesman confirmed the probe is underway.

"As soon as Vodafone became aware of the issue we instigated a forensic audit to investigate the facts relating to the alleged fraud. As this matter remains under investigation, we cannot comment further," the spokesman stated.

Vodafone completed the €7.2 billion acquisition of Ono in July, in a move designed to boost the operator's convergence strategy in Spain. In a statement at the time, Vodafone predicted Ono would deliver a "significant time-to-market advantage and network reach that is complementary to Vodafone Spain's ongoing fibre-to-the-home build programme with Orange."

The operator amended its agreement with Orange after completing the Ono purchase. While originally intended to cover 6 million homes and businesses by September 2017, the target was pared back to 3 million premises by 2015. Vodafone and Orange will install fibre covering 2 million premises, with Ono providing access to the final million.

Reports of the Spanish tax irregularities come just weeks after Vodafone won the latest round in an ongoing dispute with India's government over tax relating to the operator's entry into the market in 2007.

Earlier this month, the High Court in Bombay rejected claims that Vodafone owed INR30 billion (€385 million/$489 million) relating to under-priced shares in a rights issue by local unit Vodafone India Services Private, Bloomberg reported.

For more:
- see this El Pais article [in Spanish]
- read Bloomberg's Ono report
- see this Bloomberg India tax article
- view Vodafone's Ono acquisition statement

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