Vodafone may bring in more than $2 bn investment, says Sibal
British telecom giant Vodafone has indicated to government that it would invest more than $2 billion to increase its stake in Indian arm to 100%. Vodafone entered the Indian market in 2007 by acquiring Hutchison's entire stake in Hutchison Essar joint venture for about $11 billion.india Updated: Oct 15, 2013 23:42 IST
British telecom giant Vodafone has indicated to government that it would invest more than $2 billion to increase its stake in Indian arm to 100%.
"They (Vodafone) have indicated to me that they would like to invest, now that FDI is 100%," telecom minister Kapil Sibal told PTI.
"Hopefully they will bring, in a short while, more than $2 billion into the country," he said when asked if government has received any communication from Vodafone on further investment in the country.
The government in August approved 100% foreign direct investment (FDI) in the telecom sector, meeting a key demand of the fund-starved industry. Earlier, the FDI cap in the sector was 74%.
Vodafone entered the Indian market in 2007 by acquiring Hutchison's entire stake in Hutchison Essar joint venture for about $11 billion.
Later in 2011, Vodafone also bought Essar's stake for $5.46 billion. Post this acquisition, Vodafone's stake was exceeding then permissible cap of 74%.
Vodafone transferred 1.35% stake to an Indian investor to remain compliant with then existing sectoral FDI norms.
It may also be noted that the British telecom major is facing a tax liability of over Rs 11,200 crore, along with interest, on its 2007 acquisition of Hutchison Whampoa's stake in Hutchison Essar.
Piramal Healthcare in August, 2011 bought 5.5 per stake in the Vodafone India for about Rs 2,900 crore.
According to sources, Piramal Healthcare now holds about 11% stake in Vodafone India and Max India's founder Analjit Singh owns about 6%.
Vodafone has already started the exercise for equity valuation to buy out entire stake of its India partners, sources said.
In April 2013, Piramal Group chairman Ajay Piramal had said the company had invested in Vodafone with 24-36 month exit plan and would sell the stake either sometime this year or the next.
Vodafone India had registered 24.5% jump in operating profit to Rs 10,640.6 crore for the financial year ended March 31, 2013.
The revenues of the company jumped 10.2% to Rs 35,885.8 crore for 2012-13 fiscal, as against Rs 32,564.3 crore in the previous financial year.
The company has invested over Rs 54,000 crore since 2007 till end of March 2013. Vodafone India had over 15.5 crore mobile customers in the country by end of June 2013.
In September this year NYSE-listed Verizon Communications had entered into an agreement with Vodafone Group to acquire Vodafone's US group with the principal asset of 45% of Verizon Wireless for $130 billion.