Airtel to wrap up stake buy by Nov '08

Bharti Airtel would buy out its 5.6 per cent stake held by British telecom giant Vodafone, by November next year for $1.6 billion. Vodafone had acquired 10 per cent stake in Airtel in 2005 in an all-cash deal aggregating to about $1.5 billion.

According to DoT's licence norms, no single promoter can have more than 10 per cent stake in two different companies in the same circle (area of operation by cellular companies is divided into circles).

Vodafone, following the acquisition of Hutchison Telecom International's (HTIL) Indian holding in telecom service provider Hutch-Essar, would soon start its operations in India and compete with Bharti Airtel in almost all circles.

A statement issued by Vodafone said: "On 9 May, the Bharti group company irrevocably agreed to purchase this shareholding and the group expects to receive $1.6 billion in cash consideration for such shareholding by November 2008."

The shareholding would be transferred in two tranches, the first before 31 March 2008 and the second by November 2008.

"Following the completion of this sale, the group will continue to hold an indirect stake of 4.39 per cent in Bharti Airtel," the statement added.

This move comes after two Vodafone directors, Gavin Darby and Paul Donovan, on the board of Bharti Airtel resigned on 24 May, following the takeover of Hutch-Essar.

Earlier this February, Bharti Group had declared that they have an arrangement to buy the 5.6 per cent direct interest of Vodafone in Bharti Airtel for $1.6 billion, on a deferred payment basis.

Vodafone Chief Executive Officer Arun Sarin, announcing the annual financial statement of the company, said "The last year has seen a further reshaping of Vodafone's portfolio, with our acquisitions in Turkey and India further increasing the group's exposure to exciting growth opportunities in emerging markets. We are well placed to continue delivering on our strategy."

The British telecom major, on 8 May, completed the acquisition of HTIL's stake in Hutch-Essar, having a subscriber base over 27 million, by paying $10.9 billion against the agreed $11.08 billion, 'reflecting retention and closing adjustments agreed between Vodafone and HTIL'.