Vodafone eyes Indian partners' stake for full control of unit

Vodafone has raised it stake to 74% in Vodafone Essar Ltd by buying shares of Essar in the company in 2011

British telecom major Vodafone is planning to buy out stakes held by its Indian partners, including Ajay Piramal-led Piramal Healthcare and Analjit Singh, in Vodafone India to gain complete control of the country's second largest telecom operator.

"Work is going on in this regard (to take parent stake to 100% by buying stakes held by Indian partners)," a source familiar with the development told PTI.

No immediate comments were received from the company.

Vodafone has raised it stake to 74% in Vodafone Essar Ltd (VEL) by buying shares of Essar in the company in 2011. The British major bought Essar's 33% stake in VEL for $5.46 billion in July, 2011.

After buying Essar's 33%, Vodafone's stake in VEL was going above the 74% FDI limit permitted at that time. Vodafone transferred 1.35% stake to an Indian investor to remain compliant with the existing sectoral FDI norms.

Piramal Healthcare in August, 2011 bought 5.5 per stake in the Vodafone India for about Rs 2,900 crore.

According to sources, Piramal Healthcare now holds about 11% stake in Vodafone India and Max India's founder Analjit Singh owns about 6%.

Vodafone has already started the exercise for equity valuation to buy out entire stake of its India partners, sources said.

In April 2013, Piramal Group Chairman Ajay Piramal had said the company had invested in Vodafone with 24-36 month exit plan and would sell the stake either sometime this year or the next.

The government in August approved 100% foreign direct investment (FDI) in the telecom sector, meeting a key demand of the fund-starved industry. It was decided to increase FDI cap in telecom to 100% from 74%.

Vodafone India had registered 24.5% jump in operating profit to Rs 10,640.6 crore for the financial year ended March 31, 2013.

The revenues of the company jumped 10.2% to Rs 35,885.8 crore for 2012-13 fiscal, as against Rs 32,564.3 crore in the previous financial year.

The company has invested over Rs 54,000 crore since 2007 till end of March 2013. Vodafone India had over 15.5 crore mobile customers in the country by end of June 2013.

The British telecom major is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.

Earlier this month, Verizon Communications agreed to pay $130 billion to buy Vodafone Group out of its US Wireless business.