In order to comply with India’s new licence rules, UK group Vodafone will likely be required to offload its 4.4% stake, estimated at US$1bn, in Indian giant Bharti Airtel.
According to the new ‘Unified Licence’ rules, published on the ministry of…
In order to comply with India’s new licence rules, UK group Vodafone will likely be required to offload its 4.4% stake, estimated at US$1bn, in Indian giant Bharti Airtel.
According to the new ‘Unified Licence’ rules, published on the ministry of telecoms’ website late last week, companies are no longer allowed to hold stakes in each other when competing in the same service areas, also known as ‘circles’.
At present, a mobile carrier can hold up to 10% equity in a rival company operating in the same area.
Vodafone India, controlled by Vodafone, and Bharti Airtel both hold 2G licences in India’s 22 circles.
It however remains unclear when Vodafone will be required to sell the stake, whose value is estimated at around US$1bn based on Bharti Airtel’s current market cap of US$22.65bn.
Vodafone declined to comment on the matter.
Plans to introduce a unified licence were confirmed in February 2012 as part of the new telecoms policy designed to bring more certainty in the Indian telecom market and create a level-playing field following the 2G scam.
The unified licence will allow operators to choose the telecom services they want to provide under a single licence. The new guidelines also consent to roaming pacts, which were previously banned.
