New Delhi, Dec. 30: The Foreign Investment Promotion Board today approved UK-based telecom company Vodafone’s Rs 10,000-crore proposal to buy out the minority shareholders of its Indian arm.
However, the deal, because of the amount of money involved, will require approval from the Cabinet Committee on Economic Affairs, though analysts see this as a mere formality.
Vodafone, which entered India in 2007 by buying Hutchison Whampoa’s local cellular assets in an $11-billion deal, directly and indirectly owns a combined 84.5 per cent of Vodafone India. Its direct holding in the unit is 64.38 per cent. Minority shareholders in Vodafone India include Piramal Enterprises and Delhi-based tycoon Analjit Singh, Vodafone India’s non-executive chairman.
Vodafone India is the country’s No. 2 telecom company by users and revenue.
A Vodafone Group statement said: “We are pleased to have obtained FIPB approval to increase our stake in Vodafone India.”
Officials said Vodafone had sought permission to raise its stake to 100 per cent at an estimated buyout cost of Rs 10,141 crore.
Two months back, the Indian government, which had been facing a run on the rupee, had allowed foreign investment up to 100 per cent in telecom, up from an earlier 74 per cent.
Since then, Singtel has decided to raise its stake in its long-distance telephony arm.
Analysts said the government expected more foreign players to raise their stakes, encouraged by the changes in mergers and acquisitions and the announcement of dates for the auction of spectrum.
Vodafone India managing director and chief executive officer Martin Pieters had earlier said the company planned to invest about Rs 4,000 crore to Rs 6,000 crore annually in the short to medium term after the buyout.
The company has been bullish on the Indian market. Vodafone Group has earmarked investment of $3 billion for its telecom networks in India over the next two years.
The decision on the Vodafone application was deferred at the previous meeting as comments from the ministry of home affairs were awaited.