Chief executive Vittorio Colao is said to be broadly in favour of the deal for industrial reasons but his deputy chairman Sir John Buchanan has doubts based on the possible reputational damage emanating from a successful transaction.
If Vodafone buys CWW the tax losses of the acquired company could either be used to offset the entire cost of the deal or be used to create a lengthy tax holiday for Vodafone.
While using up another company’s tax losses is perfectly legal there are some on the board who feel that it would be harmful to the Vodafone brand, both in the UK and around the world.
Analysts at Espirito Santo recently said in a note: "Vodafone may be concerned about reputational damage with consumers following any deal which potentially could be perceived as the company actively trying to lower its UK tax burden (albeit legally).
The telecoms group has been caught up in a string of tax disputes in recent years.