Vodafone boss seeks stable policy, level playing field

Vodafone Chief Executive Officer  Vittorio Colao on Thursday called upon Telecom Minister Manoj Sinha, reaffirming the group’s commitment to the Indian market and seeking a predictable policy regime.

Vodafone last week bid the highest amount of Rs 20,280 crore in spectrum auctions. Vodafone is one the largest foreign investors in India and till March 31, the group had invested Rs 1.15 lakh crore. In 2016-17, the group would bring fresh equity of Rs 47,700 crore to India.  

This was Colao’s first meeting with Sinha. “We requested a predictable policy regime with a level-playing field and a fair application of the goods and services tax (GST) and other levies,” Colao said after the meeting.

He expressed concern that after the GST rollout, the tax rate for telecom services would go up to 18-20 per cent. The service tax rate now is 15 per cent.

The Vodafone boss also said some telecom players were required to pay a one per cent usage charge for broadband wireless access (BWA) spectrum bought in 2010, whereas others had to pay in the range of 3-5 per cent.

The government has decided to use the weighted average method to calculate spectrum usage charges on the condition that the annual charges for any operator will not fall below three per cent. In calculating the average, a rate of one per cent for BWA spectrum acquired in 2010 will be applied.

Bharti Airtel, Aircel and Reliance Jio Infocomm won spectrum in the 2,300 MHz band, or BWA spectrum, in the 2010 auctions. Vodafone did not buy any spectrum in the 2,300 MHz band in 2010.

FIRM’S CONCERN

• This was the first meeting between the Vodafone chief and telecom minister Manoj Sinha
• The group has reaffirmed its commitment to the Indian market and sought a predictable policy regime
• Vodafone chief expressed concern that after the GST rollout, the tax rate for services would go up to 18-20% from 15%
• He told the minister given the financial condition of telcos, paying such a high rate won’t be possible
• Some telcos were required to pay a 1% usage charge for BWA spectrum bought in 2010 whereas others had to pay in the range of 3-5%, he informed the minister

“The first mega spectrum auction will enable us to quickly roll out fourth-generation services and offer the Vodafone SuperNet experience in more circles. During the meeting, we reaffirmed our commitment to India and to supporting the government’s thrust on financial inclusion by expanding our M-pesa service,” Colao said.

Vodafone last week acquired a total of 2 x 82.6 MHz FDD and 200 MHz TDD spectrum, providing high-capacity, multi-band 4G capability operating across the 1,800, 2,100 and 2,500 MHz bands.

The company will now have 17 circles with 4G capability, covering 90 per cent of its total revenue and 94 per cent of mobile data revenue.