The New York Times | March 27, 2011 | Heather Timmons
NEW DELHI — When the British mobile phone giant Vodafone bought an Indian wireless company for $11 billion in 2007, the chief executive at the time, Arun Sarin, praised the new “tremendously exciting, fast-moving market.”
But despite adding tens of millions of customers to become India’s third-largest mobile phone company, Vodafone has found this vaunted high-growth market full of unexpected hazards.
First came a surprise tax bill, estimated at $2.5 billion, that Vodafone is still appealing to the Indian Supreme Court. And a brace of new competitors has squeezed margins so tight that Vodafone last May wrote down the value of its India operations by $3.5 billion.
Most recently, a government corruption scandal over the awarding of additional wireless radio spectrum has delayed the much-needed industry consolidation, making it impossible to predict when Vodafone’s profits will improve.
Within India, Vodafone trails Bharti Airtel, the pioneering company that created India’s private mobile market in the 1990s and snapped up many of its most-lucrative customers. The country’s No. 2 carrier is Reliance Communications, which is part of the billionaireAnil Ambani’s conglomerate.
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