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LONDON (Alliance News) - Vodafone Group PLC has bought the 11% stake in its Indian subsidiary that it didn't own for GBP882 million from Mumbai-headquartered Piramal Enterprises Ltd.
In a statement Thursday, Piramal said it will sell the stake for INR1,960 per share or INR88.98 billion, the equivalent of about GBP880 million.
The transaction is expected to the be completed Friday.
Piramal had acquired the stake for INR1,290 a share in 2012, meaning that the value increased by 52%.
India is Vodafone's largest territory by customers, with over 160 million, and the number of mobile internet users increased 38% to 45.7 million in its most recent quarter. Data usage is also growing strongly. Vodafone India posted a 10.7% rise in revenue in 2013.
The company bought out its partner in the business, Essar Group, in July 2011, paying USD5.46 billion for a 33% stake. This left Vodafone with a 74% interest, in compliance with the cap on ownership by companies outside of India. However, this policy has since been removed, opening the door for companies like Vodafone to take complete ownership of their Indian operations.
In February, Vodafone bought up mobile spectrum licences in India for GBP1.9 billion, enabling it to roll out 4G services and bolster its 3G services in key cities like Mumbai and Delhi.
"For Vodafone the spectrum buy is about shoring up spectrum holdings and building a platform for 4G. It is still appealing the decision to force it rebid for 900MHz spectrum rather than having its licences renewed, but has hedged its bets by acquiring this spectrum in Mumbai, Delhi and Kolkata," Senior Telecoms Analyst at IHS, Julian Watson told Alliance News at that time.
"More broadly this is about Vodafone increasing its exposure to India: despite considerable regulatory and tax risks it is also seeking full ownership of Vodafone India," Watson added.
Vodafone had pledged to spend a chunk of the USD130 billion it got for selling its stake in Verizon Wireless late last year on bolstering its 3G and 4G networks in key regions. In Africa, the Middle East and Asia-Pacific region, Vodafone has said it will invest GBP1.5 billion to extend 3G coverage across major cities and key regions and establish a fibre optic network.
Shares in Vodafone were trading down 0.7% at 218.40 pence Thursday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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