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UK-based Vodafone Plc has sought approval to raise the stake in its India unit to 100 per cent for Rs 10,141 crore, showing that the world's second biggest mobile operator remains bullish on the country despite tax dispute with authorities and a gloomy business environment.
Vodafone applied to the Foreign Investment Promotion Board (FIPB) for approval to raise stake in Vodafone India to 100 per cent from the current combined direct and indirect holding of 84.5 per cent.
After the FIPB approval, the matter will go to Cabinet Committee on Economic Affairs (CCEA) upon whose approval Vodafone India is expected to become the first mobile operator in the country to be fully owned by a foreign company.
The government had in August relaxed rules to allow foreign companies to own 100 per cent of their businesses here instead of previous limit of no more than 74 per cent.
"Vodafone confirms it has filed an application with the FIPB to increase its holding in Vodafone India Ltd from 64.38 per cent to 100 per cent," the firm said in a statement.
Vodafone, which entered India in 2007 by buying Hutchison Whampoa in Hutchison-Essar Ltd in a USD 11 billion deal, directly holds 64.38 per cent stake in Vodafone India.
The telecom major has been slapped with a tax liability of over Rs 11,200 crore, along with interest, for the acquisition and is in discussions with the government to resolve the issue.
It will buy minority investors including billionaire industrialist Ajay Piramal, who holds 11 per cent stake in India's second largest telecom company by subscribers. The remaining 25 per cent interest is with undisclosed minority shareholders, who are understood to include Analjit Singh, non-executive chairman of Vodafone India.
Vodafone said it has always maintained that it would like to increase its holding in the business and the plan of further investment demonstrates Vodafone's long-term commitment to India.
"The total inflow of foreign investment into India as a result of the proposed transactions will be approximately Rs 10,141 crore. Following the completion of these transactions, Vodafone will also consider providing additional funding to VIL by subscribing to equity shares of VIL," Vodafone said.
