Fresh off the US$130bn disposal of its minority stake in Verizon Wireless, Vodafone Group is now looking at potential acquisitions in India.
The CEO of the British telco’s unit on the subcontinent, Marten Pieters, described the operator as a…
Fresh off the US$130bn disposal of its minority stake in Verizon Wireless, Vodafone Group is now looking at potential acquisitions in India.
The CEO of the British telco’s unit on the subcontinent, Marten Pieters, described the operator as a “natural consolidator in the market”, according to an interview he gave to the Financial Times.
Pieters said that Vodafone was financially strong in the country and wanted scale, but that India’s regulatory conditions were not currently suitable for M&A. In particular the company is seeking clarification on merger rules in relation to the transfer of spectrum licences between companies. This could be resolved before the end of the year.
It was reported a month ago that Vodafone may be required to offload its 4.4% stake, estimated at US$1bn, in Indian giant Bharti Airtel in order to comply with India’s new licence rules. Under the new regulation, companies are no longer allowed to hold stakes in each other when competing in the same service areas.
Vodafone now has a sizeable war chest, following the agreement to sell its stake in US operator Verizon Wireless for US$130bn, and will reportedly look to emerging economies like India and South Africa to expand.
The British group is the number two operator in India behind Bharti Airtel. It also faces competition from Reliance Communications, Idea Cellular, BSNL, Tata Docomo, Aircel, Uninor and MTS India, along with some smaller operators.
The splintered market appears ripe for consolidation but regulatory uncertainties and issues in the aftermath of the 2G scam have deterred investors and delayed potential deals.
Another potential barrier to Vodafone expanding in the country is an outstanding US$2.6bn tax bill. The British group contends the levy, which is the result of amended tax laws on cross-border transactions. Indian authorities want the telco to pay capital gains tax in relation to its 67% acquisition of Hutchison Essar back in 2007.
Vodafone is also planning to list in the country at some point, Pieters was quoted as saying. Previous IPO plans had been put on hold as the company was waiting for greater clarity on some regulatory issues.