Setting at rest mounting speculation this morning, it was announced today that Vodafone would acquire a 10-per cent economic interest in Bharti TeleVentures (BTVL), India's largest private sector telecom company.
This is the first major deal in the telecom sector after the recent cabinet decision to hike FDI limit in the telecom sector to 74 per cent.
The whole deal would cost Vodafone Rs6,700 crore (around $1.5 billion) making it the largest single foreign investment ever in India and also the largest in the Indian telecom sector. Bharti Enterprises continues to hold shareholding and management control in Bharti TeleVentures.
Till the announcement came at an urgently called press conference at 11:00 am at the The Oberoi, New Delhi, the entire morning was caught in the grip of rumours that Bharti TeleVentures might announce a sell-off to either SingTel, which has 30-per cent stake in Bharti or the Vodafone group, whose global head Arun Sarin was in India recently.
Arun Sarin, Vodafones, global head is currently in New Delhi. The media had been speculating in recent months about Vodafone planning to acquire a significant stake in an Indian telecom company, fuelled by Sarin's earlier visit last month.
At the press conference it was announced that Vodafone will acquire a direct 5.6-per cent stake in Bharti Televentures through Vodafone International Holdings BV, from private equity firm Warburg at around Rs350 per share, higher than the prevailing market price.
Vodafone would also pickup an undisclosed stake in Bharti Enterprises, the ultimate holding company of Bharti Televentures (the listed company that owns the various operating companies of the Bharti group) through Vodafone Mauritius Ltd, which would enable it to have a 4.4-per cent beneficial interest in Bharti TeleVentures.
Bharti Enterprises maintains a controlling interest of 45.9 per cent in BTVL through its subsidiary, Bharti Telecom Ltd.
Warburg was one of the first financial investors in the Bharti group in late '90s and has been progressively bringing down its holding over the last two years. With this deal, Warburg has completely exited Bharti TeleVentures.
Singapore Telecom or SingTel, another strategic investor in the Bharti group, holds a much larger stake in the group. It holds a 15.78 per cent stake directly in Bharti TeleVentures besides a stake in the holding company. After the Vodafone deal, the total foreign holding in the Bharti group would be between 67 and 68 per cent - lower than the increased limit of 74 per cent.
Vodafone is the single largest mobile telecom company in the world having direct operations in 27 countries. The group has a leadership position in most European markets. In other large markets like the US and China, the group holds strategic stakes in telecom operators. In addition, Vodafone has an indirect presence in 14 countries worldwide in partnership with other companies. The group has more than 165-million subscribers worldwide and a market capitalisation of more than $150 billion.
Bharti TeleVentures is the largest mobile telecom company in the country, enjoying a market share of close to 22 per cent. The company provides mobile telephone services in all the telecom circles and has a subscriber base of over 14 million as of September end. The company also has more than 1 million fixed services subscribers taking the total subscriber base to over 15 million.
Bharti TeleVentures expects to post revenues in excess of Rs10,000 crore this financial year and has a market capitalisation of over Rs60,000 crore.
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