New Delhi, Feb. 6: The cabinet today cleared UK-based Vodafone’s proposal to buy out minority shareholders in its Indian arm for Rs 10,141 crore, the single largest foreign investment in the telecom sector.
After this, Vodafone India will be the first telecom operator in the country to be fully owned by a foreign company.
Vodafone entered the country around six years ago by buying Hutchison Whampoa’s Indian mobile business for $11 billion and now owns about 64.38 per cent in the India unit directly. It holds another 20 per cent stake, indirectly.
Minority shareholders in Vodafone India include Piramal Enterprises and Delhi-based tycoon Analjit Singh, Vodafone India’s non-executive chairman.
Vodafone sought government’s permission to hike its stake after the Centre in August allowed foreign investment in telecom up to 100 per cent from 74 per cent.
The Foreign Investment Promotion Board has already cleared the proposal. Since the sum involved was more than Rs 1,200 crore, CCEA approval was necessary.
Meanwhile, the Bombay high court today directed the Income Tax Appellate Tribunal to hear a dispute between Vodafone India Services and the tax authorities over a Rs 3,700cr tax claim in a transfer pricing case on a daily basis from February 21.
Vodafone is also involved in a Rs 11,200-crore tax dispute with the government surrounding its acquisition of Hutchison Whampoa’s stake in Hutchison Essar in 2007.
Vodafone today reported a 2 per cent decline in its India service revenue to £937 million (about Rs 9,541 crore) during the three months ended December 31.
The telecom company’s revenue was £956 million in the same period a year ago.
On an organic basis, India service revenue increased 13.2 per cent, driven by customer growth, higher voice use, improved voice pricing and a doubling of data use, the company said in a statement. Organic earnings exclude revenues from mergers, takeovers and acquisitions.
The CCEA has approved a hike in sugarcane price by Rs 10 per quintal to Rs 220 for 2014-15. However, the government deferred its decision on providing cash subsidy on raw sugar export.