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Vodafone to invest $3 bn in India.

By Christopher Brace | Vjmedia Works | December 05, 2013

The company's chief executive Colao said the group would look at listing the Indian unit once the Rs 11,200-cr tax dispute was settled.

British telecom giant Vodafone will invest $3 billion (Rs 18,605 crore) in India over the next two years to expand its network, especially in rural areas, group chief executive Vittorio Colao said on Wednesday. The proposed investment, about 15 per cent of the group's global investment, is its biggest spending worldwide and excludes the expenditure for buying spectrum in India.

Colao, who met Finance Minister P Chidambaram on Tuesday, said the tax dispute in India was in no way upsetting its investment plans here.

Colao said the group would look at listing the Indian unit once the Rs 11,200-crore tax dispute was settled, it received the Foreign Investment Promotion Board's nod to raise stake in its Indian arm to 100 per cent and there was clarity on spectrum use charges.

Vodafone now has 64.38 per cent in the Indian unit; increasing its stake will mean an investment of Rs 10,141 crore for buying out Analjit Singh, chairman of Vodafone India, among others.

Colao said: "We have a lot of respect for Analjit Singh. If everything stays compatible, we would like to continue the relationship," he said.

For Vodafone, India and Germany are the two most important markets, Colao said. "The priority for us is India, followed by data in India and then data in the rest of the world," he said, adding priority here would be the enterprise business.

Colao declined to comment on the tax issue. "I am grateful to the finance minister for giving me time. It is good to have a dialogue between an enterprise and the policymaker," he said. Parrying a question on whether Vodafone would pay Rs 11,200 crore in income tax, he said the company was incredibly positive about India "not only from the business point of view but otherwise, too". Vodafone is facing a tax liability of Rs 11,200 crore on its 2007 acquisition of Hong Kong-based Hutchison Whampoa's stake in India's telco Hutchison Essar.

Commenting on Vodafone's stake in a Bharti Group company, Colao said the company had the stake in the holding company and that was unlikely to have any impact. "If needed, we'll find a solution," he said.

While Colao refused to comment on merger and acquisition (M&A) in India as the government gives shape to an M&A policy, he said the company would look into opportunities in future.

However, he said he was not allowing any consideration in the tax case. "We consider the market, we consider the customers and we consider the long-term investments," he added.
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