Less bad

31 October 2013 By Una Galani Follow @ugalani

The British telco is set to take full control of its Indian unit amid hopes it is turning a corner. The indicated price, based on terms set two years ago, implies a value of $10.6 bln. That’s less than Vodafone paid for previous stakes, and less than implied by peer valuations.

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Vodafone said on Oct. 29 that it has sought approval from the authorities to buy the 15.5 percent of its Indian unit that it does not already own for 101 billion rupees ($1.65 billion).
The telecoms operator directly and indirectly owns a combined 84.5 percent of Vodafone India, India’s second largest telecoms operator by subscribers.
India relaxed rules on foreign holdings in the telecoms sector in August, allowing foreign companies to take full ownership of local carriers. Before the rule change, foreign companies were limited to direct stakes of no more than 74 percent in Indian carriers.
Vodafone entered India in 2007 by buying a 67 percent stake in what was then Hutchison Essar from Hutchison Whampoa for $11 billion.
As part of a 2011 deal whereby Vodafone increased its stake while complying with Indian rules, India’s Piramal Enterprises acquired about 11 percent of Vodafone India. Piramal agreed at the time to sell its shareholding to Vodafone for an aggregate price of between 70 billion rupees and 83 billion rupees under certain conditions, including if an initial public offering of the Vodafone unit was not completed by 2014.
The remaining 4.5 percent is held by a group of investors and is under call and put options.
Vodafone’s India unit reported EBITDA of 1.24 billion pounds ($1.99 billion) for the year ended in March 2013, a 10.5 percent increase on the previous year.

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