Piramal to Sell 11% Stake in Vodafone India for Rs 8,900 cr - The New Indian Express

Piramal to Sell 11% Stake in Vodafone India for Rs 8,900 cr

Published: 11th April 2014 08:38 AM

Last Updated: 11th April 2014 08:38 AM

In a possible first for the Indian telecom industry, mobile service provider Vodafone will have 100 per cent stake of its business in India as the British-based company announced that it will buy out Piramal Enterprises Limited’ 11 per cent stake in its Indian company for `8,900 crore.

In October last year, Vodafone had said that they were seeking government approval to invest `10,141 crore to raise its stake in India unit to nearly 100 per cent. The company had stated that it would buy out all minority shareholders stake to gain full control of its India unit. The developments coming after the Union Government decided to relax foreign direct investment (FDI) that allowed up to 100 per cent investments into the telecom sector.

The latest move to buy 11% stake from Piramal would give the British telecom giant full control of the company. Piramal said that it will get `1,960 per share through this deal. The latest prices offered almost 50 per cent higher than when Piramal purchased shares from Vodafone India at `1,290 per share in 2011-12, it was reported. The total size of the transaction (in two tranches) was valued at `5,864 crore.

“The equity purchase in Vodafone was consistent with our objective of making investments that offer opportunity to generate attractive long-term return on equity,” Ajay Piramal, Chairman of the Piramal group said.

Agencies quoted Ajay Piramal as saying that the company had managed to reach their targeted returns from the investment. Vodafone entered India in 2007 by taking over mobile service provider Hutchison Whampoa (Hutch) local unit in a $11 billion deal. The Vodafone group is said to have had a 84.5 per cent share of its India unit. The UK parent had previously purchased a 4.5 per cent stake held by Vodafone India non-executive chairman Analjit Singh.

With this the mobile subscriber base rose to 88.63 crore with Vodafone adding close to 23 lakh new customers, according telecom regulatory body, Telecom Regulatory Authority of India (TRAI). Piramal shares rose 3.73 per cent to `556.15 at the close on the BSE, the highest level since January 22.

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