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Vodafone ready to settle tax row outside arbitration

September 25, 2014 18:15 IST

Vodafone Group chief executive officer (CEO) Vittorio A Colao does not rule out the possibility of a settlement of his company’s Rs 16,000-crore (Rs 160 billion) tax dispute with the Indian government through a route other than the ongoing arbitration process that has just begun.

At a luncheon meeting with journalists here on Wednesday, Colao said he and his company, which ran the second largest telecom services in India, had great faith in the ‘civilised’ process of settling disputes through arbitration.

But nothing outside that is ruled out, he said.

The Indian government, on its part, has made it known that it would follow the arbitration path to resolve the tax dispute that arose in the wake of Vodafone’s purchase of overseas controlling shares in the Indian entity in 2007.

The principal tax demand pertained to capital gains of an estimated Rs 7,900 crore (Rs 79 billion), which with interest would have doubled over the past seven years.

In addition, there is a penalty of at least 100 per cent of the principal amount. Colao, who arrived here on Wednesday morning and was accompanied by Vodafone India CEO Marten Pieters, said he would be open to listing his company in India. “I would love to list the company at the right time and with the right conditions so that Indian shareholders too benefit from the exercise,” he said.

Explaining further, Pieters said for a listing to happen it was necessary to remove the uncertainty over the company’s renewal of the spectrum that was now a matter of a court dispute.

If the company did not have a fall back option if it lost its spectrum at the time of its renewal through an auction, then there would be no business for the company and a listing would not be able to get the right value in such a situation, he said.

Expressing his confidence in the Indian market and the government, Colao said he was more optimistic about India than he was a few months ago.

He, of course, expressed the hope that the merger and acquisition norms got better so that there were fewer players in the market offering better value to every stakeholder.

“Up to four operators in any market is the ideal situation”, Colao said, adding that consolidation of telecom players in India was necessary to help the industry."

"Colao said he would be bothered if there was an unfair regulatory situation, but he pointed out that it was not his job to judge the government. He felt Vodafone was bringing in a lot of money into the Indian market for investment and expansion of its operations in a bid to become a converged company. There was, however, need for the decision making process to be in tune with the political will of the government.

Translate intention into acts: Vodafone chief tells govt Vodafone Group chief executive Vittorio A Colao on Wednesday said the Centre should “make sure political intentions (are) translated into administrative acts”.

After releasing the company’s fourth annual sustainability report here, he said though investor sentiment in India had improved after the National Democratic Alliance government came to power, “too much is locked in offices”. “We need quick decisions.

There are too many ‘non-logical’ rules and regulations in India,” Colao said, adding the private sector could deliver much better, provided rules were made simpler, enough resources provided and quick decisions taken. “Everywhere in the world, we, the private sector, can deliver.

We can deliver a lot of things for inclusive growth, including broadband and money transfer services,” he said. Colao complained about the scarcity of spectrum.

“Issues such as spectrum are important…trust the private sector and you will see it will deliver. We are the real engine to drive the Digital India service,” he said.

So far, the company has invested Rs 70,000 crore in India. In a statement, the Vodafone CEO said: “In the last two decades, mobiles have truly transformed the way people engage and interact.

In fields such as education, health care, agriculture and financial inclusion, the progress enabled by mobile is unparalleled.

Importantly, the social development sector has also significantly benefited from advances in both mobile reach and technology.” Vodafone India has donated Rs 1.2 crore, collected from its employees and their families, to Educate Girls, the company’s non-governmental organisation partner.

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