Vodafone's Cable & Wireless India acquisition under government scanner

NEW DELHI: Vodafone's acquisition of Indian arm of UK-based Cable & Wireless is under government's glare even as its tax dispute over acquisition of telecom company Hutchison Essar continues.

Vodafone Europe BV acquired 74% stake in Cable & Wireless Networks India after it acquired the company's parent in a global transaction in July last year.

The company had approached the Foreign Investment Promotions Board (FIPB) informing about the change in ownership. FIPB said any change in the ownership has to be treated as a fresh proposal in certain sectors such as telecom where the government wants to know the ultimate beneficiary.

It said that if there is a change in the ownership of an asset located in India, then it has to be examined in respect of the ultimate ownership through a fresh proposal in sectors such as telecom which are on the approval route.

The company has been asked to make a fresh application detailing the beneficial ownership in the project.

The company has sought more time to furnish the details.

Cable & Wireless Networks India was set up in January 2007 to provide international long distance and national long distance telecom services in India.

The company's UK parent had 74% share in the venture, the maximum allowed under the policy.

In July last year Vodafone had acquired Cable & Wireless Worldwide.

The Department of Economic Affairs has reasoned that even though there is no change in the shareholding of the company, it required approval citing two of Vodafone's earlier acquisitions including that of Hutchison Essar for which it is locked in tax dispute with the Indian government.

The DEA noted that when Vodafone Group company Prime Metal acquired shares from the overseas Essar Group company it came up to FIPB.

Vodafone is locked in a tax dispute with the Indian government relating to its 2007 acquisition of Hutchison Essar.