Vodafone may have to sell $1 bn Bharti stake under licence rules

This, as new rules outlawed crossholdings in rival telecom companies

Vodafone Group Plc may be forced to sell its 4.4% stake in India's top telecom services provider Bharti Airtel Ltd - worth about $1 billion - after rules published on Friday outlawed crossholdings in rival telecom companies.

Under the rules, no carrier can own a direct or indirect equity stake in another operating in the same of any of India's 22 telecom service areas. Bharti and Vodafone provide services in all of them.

The telecom ministry's new licensing rules also say that no stakeholder other than the government, banks and financial institutions, which owns 10% or more in a carrier will be allowed to own a stake in any other carrier.

Companies must comply with the rules within a year from the date of grant of new licences, the ministry said. Applications for the licences may take months to process.

Vodafone, which owns a majority stake in Vodafone India - India's No. 2 phone carrier, has owned its Bharti stake for years. At Bharti's stock price of about 345 rupees, the stake is worth roughly $1 billion.

Bharti declined to comment and Vodafone did not reply to an email seeking comment.