Tags: Vodafone | Ono | tax | fraud

Vodafone Starts Audit Into Possible Tax Fraud at Ono Unit

Monday, 27 October 2014 11:19 AM

Vodafone Group Plc began an internal probe into possible tax fraud at Grupo Corporativo Ono SA, the Spanish cable operator it bought this year for 7.2 billion euros ($9.1 billion).

The mobile-phone carrier started “a forensic audit to investigate the facts relating to the alleged fraud” as soon as it became aware of the issue, Newbury, England-base Vodafone said yesterday, after El Pais newspaper reported the probe. Deloitte LLP is leading the investigation.

The alleged fraud occurred at Ono resellers who sold international call minutes in Spain and failed to declare value-added taxes, said three people familiar with the matter, who asked not to be identified because the details are private. Ono didn’t receive financial benefits and the probe doesn’t pose a threat to the acquisition, one of the people said.

A representative for Deloitte declined to comment. PricewaterhouseCoopers LLP, which said in April it was appointed as Vodafone’s auditor in Spain and has worked with Ono, had no immediate comment.

A spokesman for Spain’s tax authority declined to comment on Ono’s taxes or whether any investigation exists.

Vodafone, the world’s second-largest wireless carrier by customers, agreed to buy Ono in March as part of a plan to add Internet and TV services across Europe. The purchase, completed in July, would help Vodafone turn around its Spanish business, which has been chipped away by price wars and a sluggish economy causing revenue declines for the last four fiscal years. Service revenue fell 13 percent in Spain in the year ended in March.

Network Spending

Vodafone is spending 19 billion pounds ($31 billion) on a network improvement program through March 2016, putting funds into faster mobile and broadband networks and expanding into more services. Vodafone bought Kabel Deutschland Holding AG for 10.5 billion euros last year to bulk up its network in Germany.

Vodafone will withhold bonuses for three Ono managers tied to the acquisition, according to a report in online publication El Confidencial. According to El Pais, the Ono division generates revenue of more than 200 million euros from international calling minutes.

Vodafone shares fell 1.7 percent to 197.20 pence at 2:21 p.m. in London, valuing the company at 52.3 billion pounds. The stock had declined 32 percent this year through Oct. 24.

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Vodafone Group began an internal probe into possible tax fraud at Grupo Corporativo Ono, the Spanish cable operator it bought this year for 7.2 billion euros ($9.1 billion).
Vodafone, Ono, tax, fraud
Monday, 27 October 2014 11:19 AM
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