Vodafone 2016 Annual Report Download - page 153

Overview Strategy review Performance Governance Financials Additional information
Vodafone Group Plc
Annual Report 2016
151
3G inter-circle roaming: Vodafone India and others v Union of India
In April 2013, the Indian Department of Telecommunications (‘DoT’) issued a stoppage notice to VIL’s operating subsidiaries and other mobile
operators requiring the immediate stoppage of the provision of 3G services on other operators’ mobile networks in an alleged breach of licence
claim. The DoT also imposed a ne of approximately €5.5 million. VIL applied to the Delhi High Court for an order quashing the DoT’s notice.
Interim relief from the notice has been granted (but limited to existing customers at the time with the effect that VIL was not able to provide 3G
services to new customers on other operators’ 3G networks pending a decision on the issue). The dispute was referred to the TDSAT for decision,
which ruled on 28 April 2014 that VIL and the other operators were permitted to provide 3G services to their customers (current and future) on other
operators’ networks. The DoT has appealed the judgement and sought a stay of the tribunal’s judgement. The DoT’s stay application was rejected
by the Indian Supreme Court. The matter is pending before the Indian Supreme Court.
One time spectrum charges: VIL v Union of India
The Indian Government has sought to impose one time spectrum charges of approximately €525 million on certain operating subsidiaries of VIL.
VIL led a petition before the TDSAT challenging the one time spectrum charges on the basis that they are illegal, violate VIL’s licence terms and
are arbitrary, unreasonable and discriminatory. The tribunal stayed enforcement of the Government’s spectrum demand pending resolution of the
dispute. The matter is due to go for nal hearing before the Indian Supreme Court, and will be listed in due course.
Other public interest litigation
Three public interest litigations have been initiated in the Indian Supreme Court against the Indian Government and private operators on the
grounds that the grant of additional spectrum beyond 4.4/6.2 MHz has been illegal. The cases seek appropriate investigation and compensation for
the loss to the exchequer.
Adjusted Gross Revenue (‘AGR’) dispute before the Indian Supreme Court: VIL and others v Union of India
VIL has challenged the tribunal’s judgement dated 23 April 2015 to the extent that it dealt with the calculation of AGR, upon which license fees and
spectrum usage charges are based. The cumulative impact of the inclusion of these components is approximately Rs. 2,200 Crores. The DoT also
moved cross appeals challenging the tribunal’s judgement. In the hearing before the Indian Supreme Court, the Court orally directed the DoT not
to take any coercive steps in the matter, which was adjourned. On 29 February 2016, the Supreme Court ordered that the DoT may continue to raise
demands for fees and charges, but may not enforce them until a nal decision on the matter.
Other cases in the Group
Germany: Patent litigation
The telecoms industry is currently involved in signicant levels of patent litigation brought by non-practicing entities (‘NPEs’) which have acquired
patent portfolios from current and former industry companies. Vodafone is currently a party to patent litigation cases in Germany brought against
Vodafone Germany by IPCom, St Lawrence Communications LLC (a subsidiary of Acacia Research Corporation), and by Intellectual Ventures,
all NPEs. Vodafone has contractual indemnities from suppliers which have been invoked in relation to the alleged patent infringement liability.
Germany: Mannesman and Kabel Deutschland takeover – class actions
The German courts are determining the adequacy of the mandatory cash offer made to minority shareholders in Vodafone’s takeover
of Mannesman. This matter has been ongoing since 2001. The German courts are also determining whether “squeeze out” compensation
is payable to affected Mannesman shareholders in a similar proceeding. In September 2014, the German courts awarded compensation to minority
shareholders of Mannesman in the amount of €229.58 per share, which would result in a pay-out of €19 million (plus €10 million of accrued
interest). The German courts also ruled that the “squeeze out” compensation should amount to €251.31 per share, which would result in a pay-out
of €43.8 million (plus interest of €23 million of accrued interest). Vodafone has appealed these decisions.
Similar proceedings were initiated by 80 Kabel Deutschland shareholders. This proceeding is in its early stages, and, accordingly, Vodafone believes
that it is too early to assess the likely quantum of any claim (however, Vodafone does not expect that the quantum of any such claim to be material).
The next oral hearing is scheduled for 18 May 2016.
Italy: British Telecom (Italy) v Vodafone Italy
The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain undertakings in relation to allegations that
it had abused its dominant position in the wholesale market for mobile termination. In 2010, British Telecom (Italy) brought a civil damages claim
against Vodafone Italy on the basis of the Competition Authority’s investigation and Vodafone Italy’s undertakings. British Telecom (Italy) seeks
damages in the amount of €280 million for abuse of dominant position by Vodafone Italy in the wholesale xed to mobile termination market for
the period from 1999 to 2007. A court appointed expert delivered an opinion to the Court that the range of damages in the case should be in the
region of €10 million to €25 million which was reduced in a further supplementary report published in September 2014 to a range of €8 million
to €11 million. Judgement was handed down by the court in August 2015, awarding €12 million, (including interest) to British Telecom (Italy).
British Telecom (Italy) has appealed the amount of the damages to the Court of Appeal of Milan. In addition, British Telecom (Italy) has asked again
for a reference to the European Court of Justice for an interpretation of the European community law on antitrust damages. Vodafone Italy has led
an appeal.
Italy: FASTWEB v Vodafone Italy
The Italian Competition Authority concluded an investigation in 2007 when Vodafone Italy gave certain undertakings in relation to allegations
it had abused its dominant position in the wholesale market for mobile termination. In 2010, FASTWEB brought a civil damages claim against
Vodafone Italy on the basis of the Competition Authority’s investigation and Vodafone Italy’s undertakings. FASTWEB sought damages in the
amount of €360 million for abuse of dominant position by Vodafone Italy in the wholesale xed to mobile termination market. A court appointed
expert delivered an opinion to the Court that the range of damages in the case should be in the region of €0.5 million to €2.3 million. On 15 October
2014, the Court decided to reject FASTWEB’s damages claim in its entirety. FASTWEB appealed the decision and the rst appeal hearing took place
in September 2015. The Court has scheduled a nal hearing for September 2016.