Vodafone’s victory in Indian tax case may speed up IPO plans (India, UK)
Vodafone’s landmark victory in the Indian tax dispute may speed up the operator’s IPO (Initial Public Offering) plans. According to reports, the British telecom giant had been planning its IPO roll-out for quite some time now, but had not taken any step in that direction due to the legal case.
As reported by Wireless Federation last week, Chief Justice S.H. Kapadia ruled in favour of Vodafone citing that the government can’t seek capital gains tax from Vodafone’s purchase of Hutchison’s wireless assets because the transaction occurred between two foreign entities. Further, the court also asked for the US$ 495 deposit to be returned to the operator along with a 4 percent interest.
Vodafone, amongst the leading operators in India, hopes to strengthen its position in one of its biggest markets with the launch of the IPO. The company was initially planning to launch the IPO in 2013; however, industry sources claim that the favourable ruling may cause the operator to speed things up, with many expecting a launch this year itself.
According to reports, many industry analysts believe that the judgement is likely to encourage large investments by foreign investors in the Indian telecom sector.
3UK’s mobile data accounts for 97 percent of network traffic (UK)
3UK, a wholly owned subsidiary of Hutchison Whampoa Ltd. has reportedly said that as much as 97 percent of the traffic on their network is mobile data. According to reports, the company said that the amount of smartphone data over its network went up by 427 percent between June 2010 and September 2011.
As per sources, Phil Sheppard, Director (network strategy), 3UK said that the company’s focus has been on users’ online experience and that its 3G network was made for mobile data. He added that downloading apps, streaming movies, getting around town with Google Maps and even checking in on Facebook, all adds up, and users are doing it now more than ever.
3UK is offering users ‘all-you-can-eat’ data tariff plans for just us$ 24 a month on a pay-as-you-go basis as compared to other networks in the region offering between 500MB and 1GB for a much higher charge. However, industry analysts believe that such extreme focus on data-heavy users could be a risk for the carrier with almost six million subscribers as it lacks any 2G spectrum to reallocate to 3G services.
Thai finance minster defends handling of CAT-True deals
Thai Finance Minister Korn Chatikavanij has defended the fact that CAT Telecom’s 3G wholesale and resale contracts with True were not open for bidding by other parties.
Korn argued that the contracts followed on from an existing project based on a contract that CAT had with Hutchison.
According to reports citing Korn, the contracts are based on the frequency having been granted to CAT long ago. Though True replaced Hutchinson Telecom, CAT still maintains the frequency’s ownership. As the project was based on a contract CAT had with Hutchison, the State Enterprise Policy Office did not ask CAT to make bidding for the open contracts.
True vows no lay off at Hutchison (Thailand)
Thai communications True has announced that it will retain the employees at the Hutchison mobile service when the company takes over the business.
True’s Chief Executive Suphachai Chearavanont vowed that none of the 1,000 people working for Hutchison’s Thailand business will lose their jobs. True, through two subsidiaries, has acquired the business in January from Hutchison.
According to Suphachai, the initial focus would be on maintaining the existing 800,000 Hutch subscribers, and on migrating them to 3G services on a HSPA platform.
True, CAT ink 3G deal (Thailand)
True Move has signed a deal with state-owned CAT that will pave the way for True’s acquisition of Hutchison’s Thai assets and to offer nationwide HSPA services.
According to True Move parent True Corp, the deal paves the way for a national 3G launch within two years. It plans to convert the 1,400 base stations owned by the Hutchison units from CDMA to HSPA, and has arranged to become a reseller of CAT HSPA services until 2026.
CAT will meanwhile convert a further 1,600 base stations to HSPA. The parties will also arrange to trade or lease parts of these networks.
True arranged to acquire Hutchison’s Thai assets for $141 million in late December. But the deal had been thrown in doubt by regulatory uncertainty – as well as by CAT’s repeated complaints that it was losing money under its concession deal with Hutchison.
CAT, which is also already True Move’s concession holder, is currently a partner in Thai JV Hutchison CAT Wireless Multimedia.
True Move will acquire Hutchison’s 800,000 customers in the deal, and aims to migrate them onto HSPA within two years.
The companies also signed a two-year CDMA 2000 network sharing agreement covering a number of provinces.
True will pay 20% of its service revenue to CAT under the accompanying concession agreements.
True in discussions to buy Hutchison’s Thai CDMA business
Thailand’s True Corp Pcl TRUE.BK has confirmed that it was in talks with Hong Kong-based Hutchison Telecom on buying the CDMA mobile phone business in Thailand.
According to Chief Executive Supachai Chearavanont, the company had just started negotiations and studied the business. They haven’t offered a price yet.
True Corp owns True Move Co, which operates Thailand’s third largest mobile network.
Vodafone challenges IT order again in the Indian High court
www.WirelessFederation.com/news: India’s second largest operator by subscriber, Vodafone has filed a petition in the Bombay High Court to challenge the Indian Income-Tax department’s claim that it has jurisdiction to levy tax on Vodafone’s $11-billion acquisition of Indian company Hutchison Essar three years ago.
The disputed tax payable in India amounts to over Rs 12,000 crore. The matter is expected to be heard by a division bench of the high court, comprising Justice D Y Chandrachud and J P Devadhar on Tuesday. The tax war was ignited after a show cause notice was sent to Vodafone’s Netherlands office, asking it to explain why tax was not deducted, as it paid $11 billion to Hutchison International, Hong Kong to acquire Indian company Hutch- Essar.
The Indian I-T department has claimed that India has the right to claim tax on the profit generated in India, even if the sale of shares of the Indian company took place outside India. The High Court was moved by Vodafone last year to challenge the jurisdiction of the I-T department to levy tax on the transaction that took place outside India between two overseas parties. As per the company, all transactions related to the sale of shares took place outside India and therefore Indian tax regime has no right to levy tax on the transaction.
Failing to get any support from the High Court, Vodafone moved the Supreme Court which had asked the company to return to the I-T department to sort out the issue of tax jurisdiction. Vodafone got liberty from SC to move the High Court directly, bypassing the lower appellate forum, if it disagrees with the I-T order.
An order was again issued by the I-T department on May 31 reiterating its original stand. This is the second time Vodafone is moving the high court on the same issue.
CAT’s bid to buy Hutch’s CDMA Network approved by Thai govt
www.WirelessFederation.com/news: Plans of state-controlled CAT Telecom have been approved by Thai government to buy full control of Hutchison CAT Wireless Multimedia. The sale was originally announced at the end of last year. A payment of 7.5 billion baht (US$232 million) will be made by the company to take control Hutch and its mobile network covering 25 central provinces.
26% in the venture is currently controlled by CAT while the rest is under Hutchison. According to CAT president Jirayuth Roongsrithong, the deal would enable CAT to generate 4 billion baht in revenue in the first year of operations and add 1.5 million Hutch customers once it merges its network in the other 51 provinces.
51 provinces in the country are covered by CAT CDMA network and Hutch network covers the remaining 25 central provinces, along with the capital city. Up gradation of EVDO network is also in Hutch plans and it will relaunch the combined network under the new band name.
