Vodafone filed for regulatory approval to fully acquire its Indian unit in a deal worth 101.41 billion rupees ($1.66 billion or €1.21 billion), as the company seeks to take advantage of new direct foreign investment rules in the country.
The company said it had filed an application with India's foreign investment panel to raise its stake in Vodafone India from 64 per cent to 100 per cent. It was reported earlier this month that Vodafone plans to invest as much as $2 billion (€1.45 billion) in the country.
Vodafone indirectly owns a combined 84.5 per cent in the India unit. Billionaire industrialist Ajay Piramal owns an 11 per cent stake.
"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," Vodafone said in a statement.
Once the transaction has been completed, Vodafone said it would also consider providing additional funding to Vodafone India by subscribing to equity shares in the company.
Until recently, foreign companies were permitted to own up to 74 per cent of Indian companies, but in July India liberalised the rules to allow up to 100 per cent ownership in a bid to attract foreign investment.
Vodafone's move comes in spite of a rather patchy relationship with the Indian government since it acquired its stake in Hutchison Essar in 2007 for almost $11 billion. The FT previously noted that the group still has an unresolved $2.6 billion dispute with the government.
Vodafone is reported to be interested in increasing investments in its major emerging market operations, including India and South Africa, in the wake of the $130 billion sale of its 45 per cent stake in Verizon Wireless.
"Looking ahead, Vodafone will continue to invest in India to bring the benefits of mobile communications and financial inclusion to more and more people across the country," the company added in its statement.
For more:
- see this Bloomberg article
- see this Reuters article
- see this Daily Telegraph article
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