Voda seeking to increase Chinese presence

Vodafone, “the world’s largest mobile operator by revenue”, has plans to use the government led restructuring of the telecoms market to increase its presence in the country.

The Chinese government is planning to shake up the local telecoms market as part of the roll out of 3G in country. And Vodafone intends to use its 3.3 per cent holding in leading carrier, China Mobile, as leverage to extend its reach in the world’s largest mobile markets.

Vodafone chief executive, Arun Sarin, is quoted by UK newspaper the Financial Times as saying that that the Big V’s $13bn stake in China Mobile could be used to take advantage of local opportunities. One of the likeliest options could potentially see Vodafone exchange its holding in Chain Mobile for a bigger stake another company.

One of the most likely scenarios in the market shake up would see second placed mobile operator, China Unicom, split up and sold to fixed-line giants China Telecom and China Netcom.

Unicom’s operates a GSM and CDMA network and has dedicated engineering teams for each. So a separation of operations could make it easier for Unicom to find strategic investors for each of the businesses.

Speculation is rife that a merged Unicom CDMA and Netcom network will roll out CDMA2000, while China Telecom will launch WCDMA or TD-SCDMA using Unicom’s GSM network.

China Mobile is widely expected to commercially introduce the homegrown Chinese-air-interface TD-SCDMA, but analysts are not ruling out the possibility that China Mobile will also pursue WCDMA.

However, it is likely that the allocation of 3G licences in China, whenever that happens, will be the only thing to put an end to the rumours, as it will likely be the catalyst for restructuring. The Beijing Olympics in August of next year are seen to be an attractive even to launch 3G services around.

Meanwhile, things are not looking good for Vodafone’s tax dispute in India. India’s Authority for Advance Rulings (AAR) has reportedly ruled that the company’s acquisition of a controlling stake in Hutchison Essar is liable to a tax bill in the region of $2bn.

Voda had been looking to dodge the punch but it seems that the AAR’s argument hinges on the claim that Vodafone’s Indian holding company Vodafone-Essar, acted as an agent, meaning that the deal took place within India and is liable for taxation as a result.