Vodafone India, a subsidiary company of Vodafone Group plc (VOD - Analyst Report) has challenged the country’s regulatory decision against the rejection of license extension in three major operating circles in India namely, Delhi, Mumbai and Kolkata. The company’s operating license would expire in Nov 2014.
The Department of Telecommunication in India rejected the company’s application stating policy changes since 2012. Indian regulators had asked the company to bid for airwaves in areas in which it has completed 20 years of operations including key metropolises.
However, the company said in its defense that the rules for the new permit for telecom license have not yet been declared. As a result, current applications for renewal should not be subjected to rejection based on these grounds
The Indian market remains significant for Vodafone despite regulatory disputes that impede its growth in that country. Given the growth opportunities, the company is accelerating its investments in India to build infrastructure. In recently published reports, the company stated that it invested approximately INR 10 billion in 2012 in Delhi, Mumbai and Kolkata.
If the disputes continue, debarring Vodafone from continuing operations in lucrative zones, it would distress the company’s financials, as it has already infused huge capital in these cities. Further, Vodafone’s entering into a new license auction remains uncertain as it has already moved a petition against spectrum auction held in India, last month.
The company condemned the decision of the Department of Telecommunication in India to put up an auction for the 900 Mhz spectrum by taking away existing licenses for the same from operators.
Based in Newbury, United Kingdom, Vodafone Group is the world’s largest revenue generating wireless communications operator and the second largest carrier after China Mobile Limited (CHL - Snapshot Report) based on subscription. In the European market, the company operates with the likes of Telecom Italia S.P.A (TI - Snapshot Report) and Telefonica SA (TEF - Analyst Report).
Vodafone has a Zacks Rank #3 (Hold).