Vodafone Plc has sought Foreign Investment Promotion Board (FIPB) approval to increase its stake in its India venture Vodafone India to 100 per cent.
Vodafone Plc, which currently has a direct stake of 64.4 per cent in the venture, will buy out the balance for Rs 10,141 crore ($1.65 billion), a company spokesperson confirmed.
The move follows the governments decision earlier this year that allowed foreign telecom companies to hold a 100 per cent stake in their Indian ventures, up from the 74 per cent permitted earlier.
Vodafone is the first telecom company to move the government for a 100 per cent stake since the Union Cabinet approved the law allowing the same in August.
With Vodafone taking the plunge, all eyes will now be on Telenor of Norway, Sistema of Russia and Maxis of Malaysia, global telecom majors that operate Uninor, MTS and Aircel, respectively, in India. Sources said Vodafone would get the requisite approval at the earliest from the government and the transaction is likely to be completed by March 2014.
Vodafone confirms it has filed an application with the FIPB to increase its holding in Vodafone India from 64.38 per cent to 100 per cent. We have always said we would like to increase our holding... and this further investment demonstrates Vodafones long-term commitment to India, a spokesman said.
The total inflow of foreign investment into India as a result of the proposed transactions will be approximately Rs 10,141 crore. Following the completion of these transactions, Vodafone will also consider providing additional funding to VIL by subscribing to equity shares of VIL. Looking ahead, Vodafone will continue to invest in India to bring the benefits of mobile communications and financial inclusion to more and more people across the country, a company spokesperson said.
Apart from the 64.4 per cent which Vodafone holds directly in the Indian venture, another 20.1 per cent is held by it indirectly through companies in which its stake is less than 50 per cent. Industrialist Ajay Piramal holds 11 per cent while Max India Group promoter, Analjit Singh, currently chairman of Vodafone India, has a 4.5 per cent stake.
Of the roughly Rs 10,000 crore that Vodafone will spend to hike its stake, Rs 8,300 crore will go to Piramal. This is because Vodafone had an agreement with Piramal to buy out his 11 pre cent stake for Rs 8,300 crore if the company failed to come up