Vodafone is ready to push ahead with its ambitious expansion plans in India after winning an Indian Supreme Court ruling over a long-running tax dispute. The company would have been forced to pay the Indian tax authorities $2.2 billion (£1.4 billion) if it had lost the case, but will now receive a $496 million(£319 million) tax refund, plus 4 per cent interest, from the government.
"This allows Vodafone to focus more on the Indian operations, focus more on getting more subscribers, being more profitable rather than fighting on the tax side of it," Romal Shetty, executive director of telecoms at KPMG's Indian unit, told Bloomberg.
However, suggestions that Vodafone would look at floating its Indian subsidiary if it received a favourable ruling have not moved forward, although seemingly remain a future objective. This decision by the Indian court lifts questions over Vodafone's future investment plans in India, and was welcomed by Vodafone CEO Vittorio Colao.
"We are a committed long-term investor in India and we have made clear all along that we have faith in the Indian judicial system," Colao said in a statement. "We welcome the Supreme Court's decision, which underpins our confidence in India. We will continue to grow our Indian business--including making significant investments in rural areas and in 3G network coverage--for the benefit of Indian consumers."
While the company hasn't indicated any timetable for its Indian expansion, an announcement could be triggered by strong fourth-quarter results from its US partner Verizon Wireless, with substance being added when Vodafone provides its third-quarter update scheduled for Feb. 9. However, any Vodafone plans could now face increasing hurdles given that India's telecom regulator wants to charge new spectrum fees and restrict operators' 3G roaming abilities.
For more:
- see this WSJ India article (sub. req.)
- see this Reuters article
- see this Bloomberg article
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