Vodafone Group, taking advantage of more relaxed foreign ownership rules, upped its stake in its Indian business unit to over 74 per cent.
It’s a show of faith in the Indian market by Vodafone, which has been involved in a long-running tax dispute with the country’s authorities.
Piramal Enterprises, the largest minority investor in Vodafone India, agreed to sell its 11 per cent stake to the UK-headquartered operator for INR89 billion ($1.5 billion).
Vodafone Group, both directly and indirectly, now owns a combined 84.5 per cent of Vodafone India according to Reuters.
India last year eased its foreign ownership restrictions in local phone companies by removing the previous 74 per cent cap. Full ownership by foreign companies is now allowed.
According to the Financial Times, the Piramal deal values Vodafone India at INR809 billion, or INR1,960 per share. That’s a sharp rise from the INR1,290 per share when Piramal bought its stake a couple of years ago.
Marten Pieters, managing director and chief executive of Vodafone India – before news of the Piramal deal broke – said he believed M&A activity in India’s mobile market was imminent as many operators were loss-making and that their options were narrowing.
“There are currently about a dozen players, with many of them making losses,” he said in an interview with the Economic Times, although Pieters declined to confirm that Vodafone itself would be a mover in the consolidation process.
India, however, appears to be a happier hunting ground for Vodafone than many of its operator rivals. For the three months ended December, revenues in India – year-on-year – jumped 13.2 per cent.
Vittorio Colao, Vodafone Group CEO told reporters in December – according to the FT – that $3 billion would be invested India over the next two years to expand networks and retail presence.