The Cabinet on Thursday approved British telecom giant Vodafone’s proposal to take full ownership control in subsidiary Vodafone India by buying out its minority partners in an estimated Rs. 10,141 crore deal.
The Foreign Investment Promotion Board (FIPB) had already approved the proposal in December last year.
The government recently relaxed the investment cap for foreign investors in the telecom sector to 100% from 74%.
The Cabinet decision comes on a day when the company announced a positive revenue growth in India. The British company, in its latest annual report, has said that it has an agreement with Piramal Healthcare to buy the latter's 11% stake for Rs. 8,300 crore if its plans to float stocks through an initial public offering (IPO) did not take place before February 2014.
The British telecom giant directly and indirectly owns a combined 84.5% of Vodafone India. Other investors including Vodafone India’s non-executive chairman Analjit Singh owns the remainder.
Vodafone had entered India in May 2007 when it bought 67% of Hutchison Essar for $11.1 billion (about Rs. 43,000 crore then), from Hong Kong based Hutchison Whampoa’s Indian arm. It is fighting a tax dispute of Rs. 11,200 crore for this transaction.
Meanwhile, Vodafone India reported a 13.2% rise in service revenue in the third quarter of 2013-14 (October-december) driven by customer growth, higher voice usage and improved voice pricing, in an otherwise dismal quarterly results for Vodafone Inc’s global revenues, that dipped by 4.8% during the same period.