Vodafone looks to sell stake in Indian operations to PE firms: report
20 Jul 2011
British telecom firm, Vodafone Group Plc is in talks with at least two private equity firms to sell a stake in its Indian operations, The Economic Times today reported citing an unnamed person involved in the discussion.
The talk comes barely a month after Vodafone bought out Ruia group's 33-per cent stake in their joint venture in India Vodafone Essar, in a $5.6-billion deal.
The buyout gave the London-based telecom operator direct ownership of 75 per cent of the company, which is just 1 per cent above the permissible limit of 74 per cent for foreign owners, forcing Vodafone to divest at least that much to a domestic partner.
A group official told ET that Vodafone may offload 1 per cent to other existing Indian investors, and then offload a larger stake to an overseas financial investor. Since the report did name any PE firms, it appears that ET's source did not reveal the names of the investors.
According to ET, Vodafone holds another option of listing a part of its stake in Mumbai, which the company has also considered, and that option is still on the table.
But both options will depend on the value of Vodafone's mobile business in India, where fierce competition and low call rates have eroded profit margins of telecom operators in the country.
