Telecom major
Vodafone India on Tuesday said its
initial public offer this year is highly unlikely due to uncertainty over
regulatory issues and pricing scenario in the sector.
"It is highly unlikely that we are able to do an IPO in the middle of so many spectrum auctions. It depends on what the final decision on auction of spectrum will be," Vodafone India Managing Director and Chief Executive Marten Pieters told reporters in Mumbai on Tuesday.
Though Vodafone India is preparing for the IPO, a final call on this can be taken only by our board and shareholders, he said, adding that "but going by the very volatile regulatory and pricing scenario, it is safe to say that a public flotation is highly unlikely this year".
The company is fighting the
government on the
issue of tax on its
acquisition of Hutchison's stake in Hutchison-Essar in 2007.
Before the tax controversy and the Trai's recent recommendations to increase the base spectrum price by 10-fold in the planned auction, the operator had said that it would hit the markets this fiscal.
Pieters, however, refused to take any questions on its tussle with the government on the tax claim.
"Vodafone India is not in a position to comment on changes to legislation set out in the Finance Bill. It would not be appropriate for Vodafone India to discuss any dispute between Vodafone Group Plc and the Indian tax authorities. Any questions related to such issues should be directed to Vodafone Group Plc," he said.
The comments come in the backdrop the government amending the tax laws retrospectively.
Pointing out that Trai recommendations are economically unattractive and that the regulatory scenario is changing on a day-to-day basis, he said, "It is creating a lot of pressure on us."
He said it is impossible for us to prepare for an IPO. "If we see the Trai recommendations happen, then the IPO for sure would be difficult to do this year," he said.
Stating that the rules regarding the business are very volatile which change by the day now, he said, "we also would need some certainty around the valuation of the business, and of course, pricing and availability of spectrum is a very important issue for every operator."
When asked about whether the company will participate in the forthcoming spectrum auctions, Pieters said, "spectrum is the most fundamental issue in the telecom business. But the way the regulator has proposed its pricing and its availability, it will not serve any purpose."
"The Trai proposal will create only artificial shortage. What is the purpose of auctions if it cannot ensure delivery of the auctioned radiowaves?" he said.
The telcom industry has been opposing the Trai recommendations saying the proposal will add billions of dollars to their costs and hurt profit, apart from pushing up call rates.
The Trai has also proposed refarming, or switching, superior-quality spectrum bands of established carriers.
On this Pieters said, such proposals will not serve anybody.
"Trai views on spectrum refarming are against public interest and public policy objectives; also contrary to license conditions; no study of impact of refarming , not in line with international practice," he said.
He further said, "despite average of 26 MHz being available in each circle, only 5 MHz/10 MHz are being recommended for auction, creating artificial scarcity, which will distort auction prices to unsustainable levels licence extension."
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