Vodafone tightens grip on Indian assets

Mega carrier Vodafone made a surprise move on Thursday, increasing its stake in the holding company behind Indian joint venture Vodafone Essar by buying out its local partner.

Vodafone exercised an option drawn up as part of its 2007 $11.7bn acquisition of Hutchison’s stake in the Indian carrier. Essar had been expected to hold onto its stake as the two had been wrangling for some time over valuation of the Indian operator.

Essar had been claiming that the Big V was trying to take full control of the Indian operator on the cheap, yet on Thursday it appears that Vodafone has paid top whack – $5bn – for Essar’s 33 per cent stake. As a result, Vodafone has increased its majority ownership of the company from 67 per cent to 100 per cent.

The move actually takes Vodafone’s direct holding in the operator to 75 per cent, with the rest held by overseas investment vehicles. But Indian foreign ownership rules limit such direct investment at 74 per cent, so Vodafone will now have to sell one per cent of its stake, with some speculating at an IPO of the business.

[icit_ranker object_id=40 ]

Tags: , ,

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.