Vodafone challenges India over licence extension rejection

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Operator says DoT’s recently launched policy does not apply to permits granted before its introduction.

Vodafone Group PLC’s Indian unit has challenged India’s move to deny the extension of permits for the U.K-based company’s operations in three lucrative service areas in the South Asian nation.

The latest standoff between Vodafone, the world’s largest telecom company by number of users, and the Indian government reflects the many regulatory hurdles faced by operators in the world’s second largest telecommunications market.

Vodafone India Pvt. Ltd., in a letter to the telecom department–a copy of which was seen by The Wall Street Journal–said a recently introduced policy wasn’t applicable to the company as it did not have any retroactive effect. The company also said since the rules for new permits hadn’t been announced yet, it could not be denied the extension of permits.

“Any subsequent change in policy cannot apply to licenses granted earlier and rights which have been protected under such licenses,” T. V. Ramachandran, resident director at Vodafone India, wrote in that letter.”It is reiterated that we continue to be governed by the provisions” of the 1999 telecom policy.

Vodafone’s response comes after India’s Department of Telecommunications recently rejected the company’s application to extend its licenses in Delhi, Mumbai, and Kolkata, which are set to expire on November 2014.

India is the fastest growing market for telecom services, but policy flip-flops in recent years have taken the shine out of the sector and have also hurt the profitability of companies.

Vodafone India is the second largest operator by number of users in the country and holds licenses in all of India’s 22 telecom service areas. Operators require separate licenses in each of those service areas.

The telecom department, while rejecting the application by Vodafone India, said the permits could not be extended as the policies had changed since 2012.