Will result in foreign investment of about Rs. 10,141 crore
The Union Cabinet, on Thursday, approved a proposal of the U.K.-based telecom major Vodafone to buy out minority shareholders in its Indian arm for Rs.10,141 crore, making it the single-largest foreign investment in the telecom sector.
“The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal of CGP India Investment Limited for an increase in foreign equity in Vodafone India Limited (VIL) from 64.38 per cent to 100 per cent. The approval would result in foreign investment of about Rs.10,141 crore being received in the country,” an official statement said.
With this, Vodafone India will be the first telecom operator in the country to be fully owned by a foreign company. In December last , the Foreign Investment Promotion Board (FIPB) had cleared the proposal of CGP India, an indirect shareholder in VIL and an indirect Mauritian subsidiary of Vodafone International Holdings BV, to increase its stake to 100 per cent. Since the proposal was worth over Rs.1,200 crore, it needed CCEA clearance. Notably, in 2013, the government had also raised FDI in the telecom sector to 100 per cent.
Vodafone will buy shares from its minority shareholders in its Indian arm held by companies of prominent business leaders - Analjit Singh and Ajay Piramal. Mr. Singh, who is Vodafone India’s non-executive chairman, holds 24.65 per cent in the company. Mr. Piramal’s share stands at 10.97 per cent. Vodafone Group Plc will pay Analjit Singh Rs.1,241 crore and Piramal Enterprises Rs.8,900 crore for their stakes in Vodafone India (after share valuation was cleared by the government).
Meanwhile, Vodafone India reported a 2 per cent drop in revenue at 937 million pounds (about Rs.9,541 crore) during the quarter ended December 31, 2013. However, its service revenue went up by 13.2 per cent, mainly due to increase in its customer base and doubling of data usage, a company statement said. Vodafone
added 49 lakh mobile customers in the three-month period, taking its subscriber base to 16 crore at the end of December 2013. The company said it had 4.5 crore active data customers, including 52 lakh 3G subscribers.
Vodafone India emerged as the top market for the entire group in terms of organic growth during the quarter. Its European business declined by 9.6 per cent. Vodafone Group’s revenue declined by 3.6 per cent to 10,977 million pounds (about Rs.1.12 lakh crore) in the third quarter. “Growth (internationally) was led by strong performances in India, Qatar, Turkey and Ghana,” it added.