Nokia Declines After Indian Tax Officials Raid Facility
Nokia Oyj (NOK1V), the Finnish mobile-phone maker struggling to reverse falling sales, declined as much as 7 percent after Indian tax officials raided its local manufacturing facility.
The shares lost 6.4 percent to 3.07 euros at 6:11 p.m. in Helsinki trading. While the stock has had five consecutive annual declines, it has tripled since a July low.
Nokia today confirmed a report that tax officials visited its manufacturing unit in Chennai in southern India. Local authorities said Nokia is suspected of tax evasion worth the equivalent of $545 million, the Economic Times reported. James Etheridge, a Nokia spokesman, declined to comment on details such as financials.
In its statement, Espoo, Finland-based Nokia said it always observes applicable laws and rulings in the countries where it operates. The company said it has been present in India since 1995 and is fully cooperating with Indian tax authorities.
Nokia, having lost market share to Apple Inc. (AAPL) and Samsung Electronics Co. (005930), has sold units and assets including its headquarters to boost its cash position. Its cash reserves have shrunk by about half in the past five years, with its net cash dropping to 3.6 billion euros ($4.7 billion) in the third quarter from 4.2 billion euros at the end of June.
The phonemaker isn’t alone in facing tax issues in India. Vodafone Group Plc (VOD) is in limbo over a potential $2.2 billion tax payment for the acquisition of Hutchison Whampoa Ltd.’s business in 2007 after the Indian government passed laws that would allow retroactive tax charges.
A tax panel set up by Prime Minister Manmohan Singh in July opposed the retroactive clause, apparently siding with Vodafone. Still, the Indian government sent Vodafone a reminder about the fees without a deadline for payment. The move prompted Vodafone to say in a Jan. 6 statement that it doesn’t believe it owes anything.
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