Oct. 30 (Bloomberg) -- Vodafone Group Plc asked the Indian government for permission to raise the stake in its local unit to 100 percent and said it would pay about 101.4 billion rupees ($1.65 billion) for the holding.
Vodafone made the request to the Foreign Investment Promotion Board, it said yesterday. The price for the additional 15.5 percent stake in Vodafone’s largest business by subscribers implies a 654.2 billion-rupee value for the entire division. The mobile-phone operator already owns 64.4 percent directly and 20.1 percent through subsidiaries.
Once Vodafone gets full control, it will consider investing additional cash through share subscriptions, the Newbury, England-based company said. The Indian unit accounts for 9.8 percent of Vodafone’s annual revenue. India removed a cap on foreign stakes in the industry in July to attract capital amid a growing current account deficit and tumbling rupee.
“We have always said we would like to increase our holding in the business and this further investment demonstrates Vodafone’s long-term commitment to India,” the company said. “Looking ahead, Vodafone will continue to invest in India.”
Vodafone sold a 5.5 percent stake in its Indian unit to Piramal Healthcare Ltd. for $640 million in 2011, to comply with rules that limited foreign ownership. The deal valued the Indian unit at $11.6 billion at the time. Piramal Chairman Ajay Piramal said in July that he planned to sell the holding back to Vodafone next year.
Vodafone fell 0.3 percent to 225.55 pence at 8:31 a.m. in London trading. The stock had gained 47 percent this year through yesterday, giving the company a market value of about 109.7 billion pounds ($176 billion).
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 to reinvest in airwaves after losing about $5.8 billion in combined investment. Bahrain Telecommunications Co. and Emirates Telecommunications Corp. both exited the market.
Vodafone India, along with its biggest competitor Bharti Airtel Ltd., may spend more to renew airwaves in 2014 with licenses for their 900 MHz airwaves set to expire.
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