Vodafone Group Plc (VOD) is considering buying out minority shareholders of its Indian unit and may begin talks in the coming weeks, according to a person familiar with the matter.
Vodafone, which has a 64.4 percent stake in Vodafone India Ltd., hasn’t determined how much it wants to spend or sought approval from the foreign investment regulator for a purchase, said the person, asking not to named as the deliberations are private. A 2011 sale of a minority stake to Piramal Healthcare Ltd. valued the business at more than $11 billion.
Buying out minority investors would make Vodafone the first wholly owned foreign telecommunications company in India since the world’s second-largest mobile market by subscribers relaxed investment rules in July. India removed a cap on foreign stakes in the industry that month to attract capital amid a growing current account deficit and tumbling rupee.
Other than the 64.4 percent direct stake in Vodafone India Ltd., Vodafone also holds 20.1 percent indirectly through subsidiaries it doesn’t control, according to its annual report. The Newbury, England-based company has call options to purchase holdings from companies with another 4.5 percent indirect stake.
Suresh Rangarajan, a Vodafone India spokesman, declined to comment.
Vodafone last month agreed to sell its 45 percent stake in the biggest U.S. wireless operator to Verizon Communications Inc. for $130 billion, giving it a windfall to use for potential deals.
A stake of 11 percent of Vodafone in India is held by Ajay Piramal, who said in a July interview that he plans to sell the holding to Vodafone next year. Other shareholders include Analjit Singh, the chairman of Vodafone’s Indian unit, the Financial Times reported today.
Vodafone shares fell less than 1 percent to 218.45 pence in London. The company gets nearly 10 percent of its $70 billion revenue from India, where annual sales have risen 137 percent since fiscal 2008, according to data compiled by Bloomberg.
Revenue for Indian carriers is rising as call rates increase and data consumption mounts after nearly two years of fallout following a $30 billion scandal over what India’s Supreme Court deemed “unbelievably low” prices for mobile-phone licenses. The court canceled 122 mobile licenses in 2012, forcing Russia’s AFK Sistema and Norway’s Telenor ASA (TEL) to reinvest in airwaves after losing about $5.8 billion in combined investment. Bahrain Telecommunications Co. and Emirates Telecommunications Corp. (ETISALAT) both exited the market.
Vodafone India, along with its biggest competitors Bharti Airtel Ltd. (BHARTI), may spend more to renew airwaves in 2014 with licenses for their 900 MHz airwaves set to expire.