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Vodafone gets comfort call

Sibal: Action time

New Delhi, Jan. 15: The government is ready to “collaborate” and discuss the concerns of Vodafone Plc on the telephony giant’s tax dues arising from its $11.2-billion buyout of Hutchison Essar’s operations in April 2007, telecom minister Kapil Sibal said today.

“We are always ready to collaborate with Vodafone and to look at some of their concerns,” Sibal said at an industry event.

Representatives of Vodafone met top finance ministry officials today as part of an ongoing negotiation to settle its tax dispute with the government.

The British telecom giant is expected to meet top revenue officials, including revenue secretary Sumit Bose, as well as Poonam Kishore, chairperson of the Central Board Direct Taxes (CBDT), to continue discussing the taxation issue over the next couple of weeks.

Earlier this month, the income tax authorities served a fresh notice on Vodafone to pay Rs 14,000 crore in unpaid taxes relating to that deal. The case relates to capital gains tax arising from the deal.

Apart from the tax demand, issues related to pricing of spectrum for the second round of auctions in March and encouraging consolidation in the sector are likely to figure in the discussions during the next couple of weeks.

“I can assure Martin Pieters (Vodafone India MD and CEO) and other telecom operators that the government is very, very, very serious about the concerns they have expressed and I can give an assurance today that 2013 will be a different year for the telecom sector,” Sibal said.

Responding to the assurance given by the minister, Pieters said, “I am glad that he gave us some hope. Now that hope needs to translate into action.”

Sibal also said the cabinet would take a final decision on the base price for an upcoming spectrum auction by February 4.

The telecom minister’s comment comes a day after the Supreme Court allowed the operators whose licences were revoked by it last year to continue providing services until February 4. The court had previously asked the companies to either get new bandwidth by January 18 or close operations.

The Supreme Court had cancelled the licences citing irregularities in their allotment in 2008. It had then asked the government to take back the airwaves allocated under the cancelled licences and auction them.

The department of telecom held an auction in November, but could sell only a part of the airwaves due to weak demand. It filed an application with the Supreme Court last week seeking an extension of the January 18 deadline so that it could complete the sale of the remaining radiowaves.

 
 
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