Vodafone could invest $2 billion to increase Indian stake

Vodafone is reportedly planning on buying out the minority shareholders in its Indian business, which would represent an investment of as much as $2 billion.

It currently holds a 64% stake in Vodafone India.

While the UK-based group has not clarified whether it wishes to pursue a 100% equity holding, it may well take advantage of India’s revised foreign ownership rules which would now allow Vodafone complete ownership of its Indian unit. Previously foreign firms could hold a maximum 74% stake in Indian businesses.

The group would have to gain the approval of the Foreign Investment Promotion Board (FIPB), which it reportedly contacted last month expressing an interest in acquiring Vodafone Chairman Analjit Singh’s 6.2% stake in Vodafone India.

Billionaire Ajay Piramal holds an additional 11% stake in Vodafone India, and has confirmed that he plans to sell his holding back to Vodafone, saying: “There has always been talk that the FDI limit could go up… and so it now looks like [a sale] will be done under the new FDI rules.”

Vodafone has confirmed that independent investors own 25% of the Indian business, including Singh, Piramal and the IDFC. The company has not commented on any aspect of the potential sale.

Following the sale of its stake in Verizon, Vodafone has proceeds to invest and India is a likely destination for them. The firm has reportedly ruled out Brazil despite initial speculation that it could acquire TIM Participacoes from Telecom Italia.

Vodafone has no current presence in Latin America, and the group seems indifferent to gaining ground in a new region, apparently preferring to consolidate its position in its existing markets. This could involve investment in either equity, as in India, or upgrading its networks.

 

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