The government on Wednesday approved Vodafone Group Plc's proposal to acquire up to 49 per cent stake in Bharti Enterprises Ltd.
When contacted, senior executives said Bharti Enterprises Ltd will remain the single largest shareholder in Bharti Tele-Ventures Ltd, its telecom services arm.
"Vodafone can increase its holdings if any of our foreign partners are willing to sell their shares. The approval is an enabling permission to help Vodafone avoid going back to the government repeatedly," an executive said.
Last month, Vodafone announced its decision to subscribe to 9.58 per cent equity in Bharti Enterprises, which held 45.9 per cent in Bharti Tele-Ventures. It had also decided to acquire Warburg Pincus LLC's 5.6 per cent stake in Bharti Tele-Ventures. Vodafone purchased the shares, with a face value of Rs 10 each, at Rs 351 per share with the deal size estimated at $1.5 billion.
Vodafone chief executive officer Arun Sarin had said that the British telecom major was happy with an initial equity of 10 per cent though it wanted to raise its stake later.
On November 18, Vodafone International Holding BV acquired 106.47 million shares, accounting for 5.63 per cent of the company's equity through an off-market deal, Bharti Tele-Ventures today informed the stock exchanges. Vodafone acquired Bharti Enterprises' 4.4 per cent stake on October 29.
Bharti Enterprises now holds around 46 per cent in Bharti Tele-Ventures, with SingTel holding 31 per cent and Vodafone 10 per cent. The total foreign investment in Bharti Tele-Ventures is estimated at close to 66 per cent, 48.52 per cent earlier, company executives said. The company's scrip rose 1.5 per cent today to close at Rs 358.60 on the Bombay Stock Exchange.
Vodafone's proposal was one of the 25 foreign direct investment cases approved by Finance Minister P Chidambaram based on the Foreign Investment Promotion Board's recommendations.
Vodafone's investment is the first case to be cleared after the government raised the foreign investment limit for telecom services from 49 per cent to 74 per cent.The deal marks Vodafone return to India. It had exited India in 2003, after selling its 21 per cent stake in Chennai-based RPG Cellular to C Sivasankaran-promoted Sterling group.