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Vodafone may sell its minority stake in Bharti

Surajeet Das Gupta  |  New Delhi 

At current prices, the stake is valued at Rs 5,200 crore.

Vodafone Group Plc, the world's largest company in terms of revenue, might sell its indirect minority equity stake of 4.39 per cent in Bharti Airtel, as part of a plan to get out of the group’s smaller investments in various companies across the world. At current prices, the stake is valued at Rs 5,200 crore.

Chief Executive Vittorio Colao gave a clear indication of the strategy when, in a first-quarter update of its results last week, he said minority investments for the UK-based company were not its core assets. "We are not here to manage minorities," he said.

A Vodafone spokesperson, when asked on the Bharti stake, declined to comment.

In 2005, Vodafone had bought 10 per cent stake in Bharti Airtel (both directly and indirectly) in what was to be a new strategic tie-up between them and the Mittals, who own Bharti, for around $1.5 billion. Then, under former CEO Arun Sarin, the company decided to go on its own by buying out Hutchison's majority 67 per cent equity stake in Vodafone-Essar (earlier named Hutchison-Essar). After which, it sold half its equity in Bharti. It holds the stake indirectly through the unlisted Bharti Telecom, which also has the Mittals and Singtel as its shareholders.
 

THE STAKE STORY
* In 2005, Vodafone had bought 10 per cent stake in Bharti Airtel (both directly and indirectly) in what was to be a new strategic tie-up between them and the Mittals, who own Bharti, for around $1.5 billion. 
* Then, under former CEO Arun Sarin, the company decided  to go on its own by buying out Hutchison's majority 67 per cent equity stake in Vodafone-Essar (earlier named Hutchison-Essar). 
* After which, it sold half its equity in Bharti. It holds the stake indirectly through the unlisted Bharti Telecom, which also has the Mittals and Singtel as its shareholders

Last year, when Colao was in India, he had said they were not happy keeping a minority stake in Bharti. The Vodafone management is under pressure from minority shareholders. The Ontario Teachers Fund, for instance, which holds 0.42 per cent stake, asked for board-level changes at the annual meeting of Vodafone, slated this week. They also plan to vote against the re-election of Sir John Bond as chairman. They have attacked the company for having a poor acquisition record

Apart from India, where it has a minority stake in Bharti, Vodafone has a 3.2 per cent stake in China Mobile. It also has a 44 per cent stake in SFR in France (the majority is held by Vivendi) and 45 per cent of Verizon Wireless (the rest is with Verizon Wireless), one of the leading US mobile companies. In India, the company could sell its stake to either the Mittals or to Singtel.

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First Published: Mon, July 26 2010. 00:14 IST
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