Vodafone Group Plc, which has resisted setting aside money for a USD 2.2 billion tax bill in India, may make a provision to cover the legal risks, Chief Financial Officer Andy Halford said in an interview. The world's second-largest mobile-phone operator is consulting on the need for a provision after an amendment by India's government to its tax law made the company potentially liable for the payment, Halford said. A decision will be made by November, he added. "The situation has changed and we are looking at it," Halford said from Vodafone's headquarters in Newbury, England. The company's test over whether to take a provision "is now being applied differently against a recently introduced, albeit retrospective, legislation". Vodafone in January defeated the initial government demand for taxes stemming from its 2007 acquisition of Hutchison Whampoa's Indian operations in the country's top court. In response, the Indian government amended the law to retrospectively tax cross-border transactions dating back to April 1, 1962. Vodafone's shares fell as much as 1.3 per cent to 173.50 pence and traded 1 per cent lower as of 0812 hours in London. The stock is the biggest decliner by index points on the FTSE 100 Index, which slipped 0.3 per cent. The British operator, which also faces increased costs for radio frequencies in India, is relying on fast-growing markets such as India as consumers cut spending in debt- stricken Europe, where the operator derives as much as 70 per cent of its revenue. Vodafone had refused to take a provision as it waited for the court ruling, saying it wasn't liable for the bill. "They continue to argue they're in the right but if the rules are changed and they get undermined, then they'll have to include it," said Andrew Hogley, an analyst at Espirito Santo in London, who values the liability at 1.3 billion pounds. The operator is scheduled to report first-half earnings in November. For the 12 months through March 2013, Vodafone is predicted to report net income of 7.9 billion pounds (USD 12.8 billion), according to 13 analysts surveyed by Bloomberg. China Mobile Ltd is the world's biggest wireless carrier. Vodafone and operators, including Norway's Telenor and Sunil Mittal's Bharti Airtel contributed to building the world's second-biggest mobile-phone market after India opened up the industry in the 1990s. Subscribers have grown 158 times to more than 900 million since 2001, and competition means users enjoy some of the world's cheapest calls. Vodafone may have to pay as much as USD 4 billion in spectrum costs at the upcoming Indian auction, Hogley said. (PTI)
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