Vodafone’s journey in India since 2007 when it entered the country by acquiring 67% controlling stakes from Hutchison has been marked with battles with the government, over the retrospective taxation issue which still continues as well as its first JV partner Essar group.
In 2011 Vodafone bought over Essar’s stake and by 2014 had established its full control over the company once the government allowed 100% foreign direct investment in the telecom sector. Starting with about 28-million subscribers across 16 circles in May 2007, today Vodafone India has about 205 million customers and footprint in all the 22 circles in the country.
Vodafone was locked in a bitter battle with Essar over its plans to find out market value of its 33 % stake, but the move was opposed by the former saying it may not help discover the true value of Vodafone’s stake. Essar went for a reverse merger, which was challenged by Vodafone in court, but lost the case and was forced to fork out $5.46 billion subsequently.
Then came the famous R14,200 crore tax plus interest and penalty for its acquisition of 67% stake in the mobile-phone business owned by Hutchison Whampoa in 2007.
The case relates to the retrospective amendment of the Income Tax laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict that had favoured Vodafone. The case has now landed up at the International Court of Justice.
Since 2007, the world’s second largest telecom operator has invested close to $13 billion in its Indian business, which the Group expected to bear results going ahead keeping in view the country’s 1.3 billion population and a growing appetite for voice and data.
Just when the company expected its investments to start bearing results, the entry of Reliance Jio Infocomm into the already crowded telecom market in September 2016, spoilt the party.
Wednesday’s announcement of Vodafone India’s merger with Idea Cellular marks another feather in the firm’s history in the world’s second largest telecom market, with the combined entity emerging as the country’s largest telecom operator beating the current market leader Bharti Airtel and giving Vodafone another chance to strike it in the Indian market, a dream which has eluded it for the last 10 years.