Vodafone will only consider an IPO in India once the $2-billion tax dispute is resolved, the telecom group’s chief executive said on Tuesday.
“We don’t have to do it…because we don’t need the money. We need to resolve the tax issue first,” said Vittorio Colao at a meeting in London, as the company announced its half-year results for the six months ended in September, and unveiled further details of its investment and growth strategy for the next two years “On the IPO, we will definitely consider that as an option.”
The company is set to spend £700 million on its India operations, as part of “Project Spring” a £7-billion global investment programme set to be completed by March 2016. The investment into India, which is in addition to its regular capex spend, will be the third largest for any country within the programme.
“I’m optimistic about the country. The governance of the country is complicated and not completely linear and not always completely predictable but I think when you go there and walk around the streets and see activity and the approach to work of people, you cannot be less than optimistic about the future,” he said. “It’s not for everybody and is challenging but strong people like us will do well in India. “
Colao added that there was “no real change” to discussions on the tax dispute. “We have had talks and continue to have talks…it’s complicated and honestly, we have to see where it goes.”
Colao’s comments come two weeks after the company confirmed that it was in talks to buy out the minority investors in its Indian joint venture, after the government relaxed the rules on foreign ownership over the summer.
“We welcome that…it means the country recognises that there is a need for investment, which we know is the case, and recognises that foreign investment is good for the country,” Colao said. “It’s positive and sends a good message to the international community.”
During the six months to September Vodafone’s strong performance in India – a 13.5 percent increase in service revenues, and a 125 per cent increase in data revenues – contrasted with a weaker performance in Europe, where the economic troubles of Southern countries such as Italy and Spain continued to drag on results, with group organic revenues down 3.2 per cent for the period.