March 21 (Bloomberg) -- Vodafone Group Plc received a 25 billion-rupee ($500 million) deposit from the Indian government the same day the country’s Supreme Court rejected a $2.2 billion tax claim against the world’s biggest mobile-phone operator.
The payment, which had been withheld by the Indian government ahead of the court’s ruling, was paid within four hours of the decision yesterday, Chief Financial Officer Andy Halford said in an interview today.
“Yesterday was very encouraging, when they could have deferred it,” Halford said at Bloomberg's offices in London. The Newbury, England-based company hasn’t yet heard whether it will be liable to further tax claims after a planned change in the law, he said.
The Supreme Court yesterday reaffirmed its earlier dismissal of the tax claim after the government last month petitioned it to reconsider its decision. The government last week proposed amending a law to retrospectively tax cross-border transactions, potentially enabling the authorities to enforce the tax claim on Vodafone’s 2007 purchase of Hutchison Whampoa Ltd.’s India operations.
The new wording of India’s Income Tax Act would apply to transactions dating back to April 1, 1962.
Vodafone and Hutchison conducted their $10.7 billion transaction offshore, with Vodafone’s Dutch subsidiary, Vodafone International Holdings BV, acquiring CGP Ltd., a Cayman Islands company controlled by Hong Kong-based Hutchison.
Vodafone, which has been proceeding with plans for an initial public offering of its Indian unit, will have to look again at the level of investment in the country amid the renewed uncertainty, Halford said.
In January, when the Indian Supreme Court rejected the tax claim for the first time, analysts including Sanford C Bernstein’s Robin Bienenstock said an initial public offering of Vodafone’s local mobile-phone unit may value the business at as much as 11.3 billion pounds ($17.9 billion).
Vodafone Chief Executive Officer Vittorio Colao last year said that an Indian IPO could be similar to the share sale of the company’s South African unit. Vodafone kept a 65 percent stake in Vodacom Group Ltd. after the business was listed in 2009.
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