Vodafone gets nod to fully own India arm

Vodafone Plc will buy out the minority shareholders, who together own 35.62% of the equity

The Cabinet Committee on Economic Affairs approved on Thursday the application of British telecom company Vodafone to raise stake in its Indian arm to 100 per cent, for Rs 10,141 crore, from 64.38 per cent at present.

In the process, Vodafone Plc, the parent, will buy out the minority shareholders, who together own 35.62 per cent of the equity. The company had approval from the Foreign Investment Promotion Board (FIPB) in December last year.

“We welcome today’s decision,” e-mailed Ben Padovan, group head of media (external affairs), for Vodafone Group Services.

The Ajay Piramal-led Piramal Enterprises, which owns 10.97 per cent direct equity holding in Vodafone India, will get Rs 8,900 crore, a premium of about 51 per cent for its stake, more than double of what it had expected (reportedly 17-20 per cent). The remaining Rs 1,241 crore will go to Analjit Singh, founder-head of Max India Ltd, who indirectly holds the remaining stake.

Piramal had invested a total of Rs 5,900 crore to buy the 10.97 per cent in Vodafone India, in two tranches. While Piramal Enterprises had invested an average Rs 537.83 a share for its stake, the selling price is Rs 811.30 a share. Piramal had first bought 5.47 per cent stake for Rs 2,893 crore in 2011. In February 2012, it bought another 5.5 per cent, for Rs 3,007 crore. Vodafone India’s valuation rose 48 per cent since February 2012, when Piramal took 5.5 per cent for Rs 3,007 crore.

Vodafone India is now valued at Rs 81,130 crore, about 42 per cent higher than the Rs 57,000 crore Vodafone Plc had paid Hutchison in 2007 to buy 67 per cent stake in the company.

Earlier, Analjit Singh had stated the valuation the British telco had offered to him for his indirect stake in Vodafone India was consistent with the agreements signed between him and Vodafone, filed with FIPB in 2007 and 2009.

Analysts say the transaction will boost investor confidence in the sector, as this is the first big investment after the Union government decided to allow 100 per cent foreign direct investment in telecommunications.

They also indicate a “reasonably good” appreciation in the company’s valuation. Said an analyst with a management consulting firm: “This may not be a benchmark for valuation. But it establishes the fact that valuations of telecom firms in India are actually appreciating.”

PTI reports: I-T case hearing
The Bombay High Court on Thursday directed the Income Tax Appellate Tribunal to hear daily from February 21 a Rs 3,700-crore transfer pricing tax demand dispute involving Vodafone India Services .  

The bench of Chief Justice Mohit Shah and judge M S Sanklecha advanced the hearing from March 21 to February 21.

The court also asked both Vodafone and the income tax department (I-T) not to seek any adjournments during the hearings. The order was passed on a suit filed by the I-T department challenging an interim order of the tribunal staying the tax demand against Vodafone India.