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Restore confidence of investors on tax system, says Vodafone

Wednesday, 21 May 2014 - 7:05am IST | Place: Mumbai | Agency: dna

Improving foreign investor sentiment and power supply across the country should be top priority of the Narendra Modi government, said Marten Pieters, MD and CEO of Vodafone India, told Priyanka Sahay. Edited excerpts from the interview:

Given the BJP government's mandate of improving the tax laws what are your expectations from the new government with respect to the retrospective act?
We have suffered clearly from an extremely aggressive tax collection in the last few years meaning that thousands of crores of rupees are entrenched on us... and with what I read in newspapers, we are not the only company in trouble. So there has been a very aggressive tax collection system, which in India I sometimes jokingly call is the biggest Ponzi scheme on earth because you collect tax that you are not entitled to. Which means you kind of pull the whole thing forward. It is very time-taking, very costly ... so it is not good for investor sentiment. I think it would be really good if the government would bring the investor sentiment back that you can rely on tax collection.

Will Vodafone increase its headline tariff and by when?
Market is complicated in India. Prices need to go up because the industry had lower prices for 17 years. We increased prices by 6.2% last year, which is far below the inflation cost. If you reduce the validity of a voucher, that is a price increase. We continue to work on cost-efficiency measures. On network side, moving from diesel to solar is one of the options that we are looking at. Probably, one of the biggest gifts that the Modi government can give us is electricity. Our costs will reduce considerably if we have reliable power supply everywhere. And he has done that in Gujarat. So if he could replicate that model for the rest of the country, that will be a blessing for the telecom industry.

Is Vodafone at par with competitors when it comes to net profitability?
We give all kinds of data on the country-level but not the net profit. We give Ebidta numbers. In this fiscal, we have turned net positive. So profitability in our situation is more a choice of how we structure our balance sheet.

What will drive the growth in the days to come?
It will be enterprise services, data services and then, of course, in the future mobile payment services.

What is your position on merger & acquisition rules in the country?
We are very keen to look into any opportunity, but it's disappointing that even after M&A rules came nothing happened. Most of us are waiting for spectrum trading, and spectrum sharing to come. The big issue is that if we look at some of the companies even if we like some of their assets a lot, there are lots of assets that we actually don't need. It all comes with lots of debt also.

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