Vodafone's Indian trauma

The $11bn acquisition of Hutchison’s Indian mobile carrier, Essar, has not been the smoothest of deals for Vodafone.

At the time of the acquisition in May of this year, the carrier took some time to secure regulatory approval. Now, it seems the Newbury-headquartered operator has received two more pieces of bad news in the space of 24 hours.

Voda is looking down the barrel of a $2bn capital gains tax bill. On Wednesday the Bombay High Court ruled to let the Indian government continue investigating the network operator. UK broadsheet, the Financial Times, reported that an additional hearing on the matter is scheduled for December 11. Not surprisingly, the carrier is fighting the claim.

Meanwhile, the Indian government has approved the findings of a spectrum allocation report by the Telecom Engineering Centre. The technical body, which represents the interests of the country’s Department of Telecom, says GSM carriers, such as Vodafone, will need to increase their subscriber base eight fold before they become eligible for an additional tranche of spectrum. In some cases, though, the TEC recommendations are less stringent than those initially set out by the country’s regulator TRAI.

The Cellular Association of India (COAI), which represents the interests of GSM carriers in the country, has challenged the recommendations, which it says favour CDMA-based network operators.