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Vodafone Group plc (VOD - Analyst Report) CEO Vittorio Colao, in his recent visit to India and in discussions with Indian Finance Minister, revealed a significant investment strategy in that key market. The company is set to make a $3 billion investment over the next two years for strong infrastructural development in the company’s wireless platform. India is considered one of the two major markets by Vodafone for investments and expansion, the other being Germany. 

Vittorio Colao in his discussion with the minister also expressed concerns over the pending tax dispute of $2 billion related to acquiring the assets of an Indian mobile company. The problem dates back to 2007, when Vodafone Group acquired the stake of Hong-Kong based, Hutchison Telecommunications International Limited in an Indian mobile company –– Hutchison Essar Ltd.

The transaction, which took place through the Netherlands-based subsidiary of Vodafone Group, resulted in the company acquiring a 67% stake in Hutchison Essar Ltd. and total control over the Indian operations of the latter.

The Indian Supreme Court bailed out Vodafone last year, stating it does not hold any tax liability on transactions taking place overseas. However, the Indian tax authorities seem to think otherwise and changed the country’s tax law retrospectively in 2012 to levy the tax on Vodafone. The case is still pending, with nothing much being done in this regard.

We believe that if the case does not work in favor of Vodafone, it may also hurt investment prospects as much of the liquidity will have to be shelled out on regulatory charges.

However, despite this prevailing issue, Vodafone has an assured investment strategy in one of the world’s largest telecom market. It intends to fully acquire stakes in the company against the current 55% holding and strengthen its position as a long-term player.

Given the growth trajectory, the company is accelerating its investments in India in building infrastructure. According to media reports, the company stated that it invested approximately $8.8 since its entry into the Indian market.

Apart from India, Vodafone is also expecting to uplift its market positions in European countries like Spain, which were among the worst hit economies in Europe. Given the influx of $130 billion from selling Verizon Wireless stakes to Verizon Communications Inc. (VZ - Analyst Report) the company expects to go ahead with its acquitting plans in this market so as to proliferate its wireless business. 

Vodafone, which operates with other European carriers likeTelef (TEF - Analyst Report) and Orange (ORAN - Analyst Report) currently has a Zacks Rank #3 (Hold).

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