India’s highest court has allowed Vodafone (LON:VOD) to launch a second arbitration process over a $2 billion tax dispute, The Times reports. The move offers hope for a resolution of the issue.
Vodafone’s share price has slipped marginally into the red in today’s session, having given up 0.17 percent to 229.30p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed marginally into positive territory and currently standing 0.16 percent higher at 7,460.17 points. The telco’s shares have added more than 15 percent to their value over the past year, as compared with an over seven-percent rise in the Footsie.
Indian tax update
The Times reported today that India’s Supreme Court yesterday that arbitrators could be appointed under an India-UK investment pact, over Vodafone’s tax dispute with the country’s government. The UK group entered India in 2007 through the acquisition of Hutchison Whampoa’s wireless assets, and the Supreme Court ruled in 2012 that Vodafone was not liable to pay any tax over the deal. The authorities, however, changed the law, allowing them to make retrospective tax claims for deals, including those that had been completed years earlier.
Vodafone has always contested the bill and in 2014 sought international arbitration of the dispute in the Netherlands, which has still not been settled.
The FTSE 100 group is currently in the process with merging its operations in the country with local company Idea Cellular, amid stiff competition in India’s telecoms sector. Last month, Vodafone inked a deal to sell its standalone tower business in the country.
Analysts on Vodafone
JPMorgan Chase & Co reiterated its ‘overweight’ stance on Vodafone today, valuing the shares at 300p, while Numis Securities continues to see the telco as an ‘add,’ with a price target of 270p on the stock. According to MarketBeat, the blue-chip telco currently has a consensus ‘hold’ rating and an average price target of 248.78p.