Almost Rs 15,000 crore of tax disputes, 3G intra-circle roaming ban and a long stretch of regulatory uncertainty in the telecom sector.
None of these has dented the confidence of British telecom giant Vodafone in the Indian market, which is reportedly in talks with the Tata Group to buy its controlling stake in Tata Teleservices.
If the deal takes place the telco would surpass Bharti Airtel, which has 196 million subscribers, to become the largest player by subscriber figures, with 248 million customers.
“The Indian market is sufficiently large and any multi-national company would look up to it as a huge opportunity,” Jaideep Ghosh, partner, KPMG India, told dna.
“Vodafone is a strong company. It is very cash rich, owing to the Verizon deal. Its revenues are much stronger as compared with other operators. Though its not the largest player, but it is a player with lucrative customers,” Mahesh Uppal, director, Com (First) India, a firm dealing in telecom regulatory affairs told dna.
It had last year struck a deal with Verizon Communications to sell its stake in a US joint venture between them for $130 billion.
The company has faced a tough time in the Indian market for almost a decade.
The British giant faces a Rs 11,200 capital gains tax dispute with the income-tax department over its purchase of Hutchison Essar Telecom Service in 2007. According to the tax authorities, the transaction involves purchase of assets of an Indian company and therefore are a part of the transaction was liable to be taxed in the country.
The whole issue got more tangled when questions were raised whether the I-T department had jurisdiction over the transaction or not. According to the company, if the tax was to be paid it should be Hutchison which should bear it.
In 2012, the government changed the Income Tax Act retrospectively to ensure that any company is not able to avoid tax by operating out of tax havens.
During his recent visit to India, Vodafone CEO Marten Pieters had said though there had been a challenging regulatory phase, he was hoped that the country had now got it right. Candidly he also said, “I think Vodafone will be here for 20, 30, or 50 or 100 years. I don’t know how long... it’s a good market for us.”