Vodafone India, a subsidiary company of Vodafone Group plc (VOD) was denied license extension in three major operating circles in India namely, Delhi, Mumbai and Kolkata. The company’s operating license would expire in Nov 2014. According to market news, Indian regulators have asked the company to bid auction for airwaves in areas in which they have completed 20 years of operations including key metropolises.
The Indian market remains one of the significant markets for Vodafone despite regulatory disputes that impede its growth in that country. Given the growth opportunities, the company is accelerating its investments in India to build infrastructure. In recently published reports, the company stated that it invested approximately INR 10 billion in 2012 in major cities like Delhi, Mumbai and Kolkata.
If the disputes continue, debarring Vodafone for continuing operations in lucrative zones, it would distress the company’s financials, as it has already infused huge capital in these cities. Further, Vodafone’s entering into a new license auction remains uncertain as it has already moved a petition against spectrum auction held in India, last month. The company went against the decision of the Department of Telecommunication in India to put up an auction for 900 Mhz spectrum by taking away licenses for the same from operators.
Based in Newbury, United Kingdom, Vodafone Group is the world’s largest revenue-generating wireless communications operator and the second largest carrier after China Mobile Limited (CHL), based on subscription. In the European market, the company operates with other industry players like Telecom Italia S.P.A (TI) and Telefonica SA (TEF).
Vodafone has a Zacks Rank #3 (Hold).
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