Vodafone no longer expects its Indian IPO to take place this year, with CFO Nick Read saying it will take at least another 12 months to prepare. In light of the fast-approaching spectrum auction, expected to raise a record amount, and uncertainties in the market, he said a 2016 listing would be “a surprise”.
Vodafone (LSE:VOD) no longer expects its Indian IPO to take place this year, with CFO Nick Read saying it will take at least another 12 months to prepare.
“I think that given the speed at which the spectrum auctions are moving, and with all the uncertainty, doing an IPO this calendar year would be a surprise,” Read said during a conference call on the London-based operator’s latest results.
CEO Vittorio Colao (pictured) added that the company is working on preparations for the IPO of Vodafone India, the country’s third largest mobile operator, and that timing depends on “bureaucratic approvals and market conditions, and on the financial market”.
A Vodafone spokesperson noted that the company maintains its position that it will only push ahead with an IPO if and when conditions are right.
Colao said last November that the company would make a decision about whether to proceed with an IPO in the 2016 fiscal year.
The UK-based mobile giant confirmed in mid-October that it had started work on the IPO and, shortly afterward, reports stated that it could call for pitches from banks to advise it on the transaction in Q1 2016. Vodafone had already hired Rothschild to look into the viability of such a transaction. It reportedly wants to see what impact billionaire Mukesh Ambani’s Reliance Jio, expected to launch commercially this spring, has on the market before deciding whether to move ahead with the listing.
Vodafone has been considering an Indian IPO for several years, but the assumption has been that it would wait until its local tax cases were settled. There have been a number of developments in this respect over the past year.
Last October, the Bombay High Court ruled in favour of Vodafone in a £450m (US$690m) tax case covering the treatment of a call centre and share options following its US$10.9bn takeover of Hutchison Essar in 2007.
However, other regulatory cases, including a separate US$2.6bn tax dispute with the government, remain unresolved.
In December, the Department of Telecommunications (DoT) gave Vodafone the green light to merge four of its local units into Vodafone Mobile Services, considered a prerequisite for an IPO.
On the call, Read acknowledged that Reliance Jio’s impending commercial launch raises questions.
“We’ve yet to see pricing, we’ve yet to see the performance of their network, how much distribution they’ve got, so – you know and then of course you’ve got the macro situations.”
He later added that capital intensity will come down in India, although the company is rolling out 3G in a further six circles as well as 4G.
“We’re not quoting the capital intensity at the moment because clearly we’re going through those plans now and finalising,” he said.
Indian telecoms secretary Rakesh Garg announced late last month that the country would hold a multi-band spectrum auction in May or June this year. Proceeds would be expected to surpass the record US$17.7bn raised in the 2015 auction.
GSMA chief regulatory officer John Giusti said in a recent statement that the trade body is “very concerned” by Trai’s recommended starting price of US$1.7bn per MHz for nationwide 700 MHz spectrum – considered important for expanding mobile broadband into rural areas.
“As the digital economy becomes increasingly important to India’s future prosperity, we encourage greater focus on the long-term benefits of connecting more people in India to affordable mobile broadband, rather than on short-term financial gain,” he said.
