Vodafone Group has moved to take advantage of a recent regulatory change by offering to buy out its partners in Vodafone India for Rs101.4bn (US$1.65bn).
Vodafone has filed an application with the Foreign Investment Promotion Board (FIPB) in New Delhi…
Vodafone Group has moved to take advantage of a recent regulatory change by offering to buy out its partners in Vodafone India for Rs101.4bn (US$1.65bn).
Vodafone has filed an application with the Foreign Investment Promotion Board (FIPB) in New Delhi and said that, once it completes the buyout, it may provide Vodafone India with further funding by subscribing to new shares in the unit.
Previous rules limited foreign operators, including Vodafone, to a maximum 74% direct stake in local telcos. Since August, this cap has been removed.
The British telco currently holds 64.38% of Vodafone India directly, and 84.5% when combined with its indirect holdings. Local conglomerate Piramal Group is the largest minority investor with an 11% stake.
Vodafone is the first company to take advantage of the new legislation.
In a statement the operator said: “We have always said we would like to increase our holding in the business and this further investment demonstrates Vodafone’s long-term commitment to India.”
In September the CEO of Vodafone India, Marten Pieters, described the operator as a “natural consolidator in the market” in an interview.
He was quoted saying at the time that Vodafone was financially strong in the country and wanted scale, but that India’s regulatory conditions were not currently suitable for M&A.
Pieters added that Vodafone India was seeking clarification on merger rules in relation to the transfer of spectrum licences between companies.
One report last week said that the government may require a consolidator to pay the authorities the difference between the initial fee paid for the licence and the current price of any spectrum acquired through a merger.
With 13 players, India’s mobile market looks ripe for consolidation. But regulatory uncertainties, such as spectrum transfers, and issues in the aftermath of the 2G scam have delayed potential deals and deterred investors.
