Vodafone plans $2 billion buyout of Indian mobile unit: FT

Vodafone will this month seek approval from the foreign investment regulator to buy some of the 36% it doesn’t own of its Indian unit. Photo: Mint

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Updated: Wed, Oct 09 2013. 01 06 AM IST

New Delhi: Vodafone Group Plc plans to spend as much as $2 billion to buy out minority shareholders of its Indian unit, the Financial Times reported.

The company will this month seek approval from the foreign investment regulator to buy some of the 36% it doesn’t own of its Indian unit, the newspaper reported citing people familiar with the matter. Vodafone India spokesman Suresh Rangarajan declined to comment to Bloomberg on the report.

Buying out minority investors would make Vodafone the first wholly-owned foreign telecommunications company in India since the world’s second-largest mobile market by subscribers relaxed investment rules in July. Vodafone last month agreed to sell its 45% stake in the biggest US wireless operator to Verizon Communications Inc.

A stake of 11% of Vodafone in India is held by Ajay Piramal who plans to sell his holding to Vodafone by early next year, the FT reported. Other shareholders include Analjit Singh, the chairman of Vodafone’s Indian unit, the newspaper said.

Newbury, England-based Vodafone gets nearly 10% of its $70 billion revenue from India where sales have doubled since fiscal 2008, according to data compiled by Bloomberg. India raised its cap on foreign investment in the industry to 100% in July, in hopes of luring capital amid a growing current account deficit and tumbling rupee.

Revenue for Indian carriers is rising as call rates increase and data consumption mounts after nearly two years of fallout following a $30 billion scandal. The Supreme Court’s cancellation of 122 mobile licences forced Russia’s AFK Sistema and Norway’s Telenor ASA to reinvest in airwaves after losing about $5.8 billion in combined investment. Bahrain Telecommunications Co. and Emirates Telecommunications Corp. both exited the market.

Vodafone India, along with its biggest competitors Bharti Airtel Ltd, may spend more to renew airwaves in 2014 with licences for their 900MHz airwaves set to expire.