Vodafone Group is seeking to build its stake in Vodafone India and is reportedly prepared to spend as much as US$2bn buying out minority shareholders.
It will file an application to India’s foreign investment promotion board this month to win approval…
Vodafone Group is seeking to build its stake in Vodafone India and is reportedly prepared to spend as much as US$2bn buying out minority shareholders.
It will file an application to India’s foreign investment promotion board this month to win approval for a deal, the Financial Times reported citing two people familiar with the situation.
The British telco holds 64% of Vodafone India. In August India relaxed its direct foreign investment laws to encourage new investment.
The change allows Vodafone to now own more than 74% – the previous limit – of its Indian subsidiary.
Minority shareholder Piramal, which owns an 11% stake, is reportedly open to selling its shares to Vodafone. But US$2bn, which Vodafone is willing to spend on buying out investors, is not expected to be enough to acquire 100% of the privately-held subsidiary, according to the report.
Vodafone declined to comment. In September Vodafone India’s CEO, Marten Pieters, was quoted as saying that his operator was a “natural consolidator in the market”.
Vodafone India is the second largest operator in the country by subscribers behind Bharti Airtel. It also faces competition mainly from Reliance Communications and Idea Cellular.
With 12 players, the market looks ripe for consolidation. But regulatory uncertainties and issues in the aftermath of the 2G scam have delayed potential deals and deterred investors.
The UK-based operator is set to be newly capitalised – after agreeing to exit Verizon Wireless for US$130bn – and has been linked with a number of acquisitions.
It had been suggested as a potential suitor for TIM Brasil but according to a report yesterday a source close to the company has dismissed the possibility.
