Vodafone India, a subsidiary of
Vodafone Group plc
), has offered to pay INR 40 billion (approximately $680 million)
to the India government to continue operations in the country's
key metros. The company's operating license will expire in Nov
2014. Since India is one of the key emerging markets for the
company, obtaining the license for operations will be crucial for
securing its future business in the subcontinent.
In April, the company challenged the country's regulatory
decision of rejecting license extension in three major operating
circles namely, Delhi, Mumbai and Kolkata. The Department of
Telecommunication in India rejected the company's application
stating policy changes since 2012. Indian regulators had asked
the company to bid for airwaves in areas in which it has
completed 20 years of operations including key metropolises.
However, the company said in its defense that the rules for the
new telecom license have not yet been declared. Accordingly,
current applications for renewal should not be subjected to
rejection based on these grounds.
Vodafone continues to focus on the Indian market despite
regulatory disputes that impede its growth in that country. Given
the growth opportunities in India, the company is accelerating
its investments there to build infrastructure. In recently
published reports, the company stated that it invested
approximately INR 10 billion in 2012 in Delhi, Mumbai and
If the disputes continue, debarring Vodafone from continuing
operations in lucrative zones, it would distress the company's
financials, as it has already infused huge capital in these
cities. Further, Vodafone's entering into a new license auction
remains uncertain as it has already moved a petition against
spectrum auction held in India in Mar 2013. The company
condemned the decision of the Department of Telecommunication in
India to put up an auction for the 900 Mhz spectrum by taking
away existing licenses for the same from operators.
Based in Newbury, United Kingdom, Vodafone Group is the world's
largest revenue generating wireless communications operator and
the second largest carrier after
China Mobile Limited
) based on subscription. In the European market, the company
operates with the likes of
Telecom Italia S.P.A
Vodafone has a Zacks Rank #3 (Hold).
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