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MarketScreener Homepage  >  Equities  >  NSE India Stock Exchange  >  Vodafone Idea Limited    IDEA   INE669E01016

VODAFONE IDEA LIMITED

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Vodafone wins international arbitration against India in $2 bln tax case

09/25/2020 | 06:41am EST

NEW DELHI, Sept 25 (Reuters) - Vodafone Group Plc said on Friday it had won an international arbitration case against the Indian government, ending one of the most high-profile disputes in the country involving a $2 billion tax claim.

An international arbitration tribunal in The Hague ruled that India's imposition of a tax liability on Vodafone, as well as interest and penalties, were in a breach of an investment treaty agreement between India and the Netherlands, two sources with direct knowledge of the matter said.

India had claimed a total of 279 billion rupees ($3.79 billion) including about $2 billion in tax, as well as interest and penalties, one of the sources said.

The tribunal, in its ruling, said the government's demand is in breach of "fair and equitable treatment" and it must cease seeking the dues from Vodafone. It also directed India to pay 4.3 million pounds ($5.47 million) to the company as compensation for its legal costs, one of the sources added.

Vodafone said in a statement the amount of the award was confidential. Shares in the company's India unit, Vodafone Idea , ended 13% higher on Friday.

"The tribunal held that any attempt by India to enforce the tax demand would be a violation of India's international law obligations," Vodafone said in its statement.

India's finance ministry said it will carefully study the award, together with its lawyers. "After such consultations, the government will consider all options and take a decision on further course of action including legal remedies," the ministry said in a statement.

"Vodafone has finally got justice first from the Indian Supreme Court and now from an international arbitral tribunal," said Anuradha Dutt, senior partner at DMD Advocates, an Indian law firm representing the company.

The ruling brings an end to one of the most controversial disputes in India under international treaty agreements that it enters into with countries to protect foreign investments.

India is entangled in more than a dozen such cases against companies, including Cairn Energy, over retrospective tax claims and cancellation of contracts. The exchequer could end up paying billions of dollars in damages if it loses.

To reduce future arbitration claims, India has ended such agreements with over 50 countries and is working on a new law to protect foreign investors by offering relief from possible policy changes even as it upholds the right to tax them, Reuters reported.

Vodafone's tax dispute stems from its $11 billion deal to buy the Indian mobile assets from Hutchison Whampoa in 2007. The government said Vodafone was liable to pay taxes on the acquisition, which the company contested.

In 2012, India's top court ruled in favour of the telecom provider but the government changed the rules to enable it to tax deals that had already been concluded.

In 2014, Vodafone initiated arbitration proceedings against India. (Reporting by Aditi Shah Editing by Euan Rocha, Robert Birsel and David Evans)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CAIRN ENERGY -0.06% 164.482 Delayed Quote.-19.76%
DEUTSCHE TELEKOM AG 0.56% 15.205 Delayed Quote.3.84%
VODAFONE GROUP PLC -0.34% 125.05 Delayed Quote.-14.53%
VODAFONE IDEA LIMITED -1.50% 9.9 Delayed Quote.62.60%
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Financials
Sales 2021 437 B 5 922 M 5 922 M
Net income 2021 -394 918 M -5 355 M -5 355 M
Net Debt 2021 1 480 B 20 070 M 20 070 M
P/E ratio 2021 -0,75x
Yield 2021 -
Capitalization 289 B 3 928 M 3 916 M
EV / Sales 2021 4,05x
EV / Sales 2022 3,83x
Nbr of Employees 17 621
Free-Float 27,9%
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Number of Analysts 19
Average target price 7,20 INR
Last Close Price 10,00 INR
Spread / Highest target 60,0%
Spread / Average Target -28,0%
Spread / Lowest Target -90,0%
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Ravinder Takkar Chief Executive Officer, Director & MD
Kumar Mangalam Birla Non-Executive Chairman
Ambrish Pandey Jain Chief Operating Officer
Akshaya Moondra Chief Financial Officer
Jagbir Singh Chief Technology Officer
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