Vodafone Group, the world's top mobile operator by revenue, said yesterday it was buying 10 per cent of Bharti Tele-Ventures, India's top mobile services firm, for £840 million pounds.
The deal represents a return to the fast-growing Indian market for Vodafone, which owns networks in 27 countries and has partners in another 14, after it sold a minority stake in a regional Indian firm two years ago.
"This transaction is consistent with Vodafone's strategy of developing our global footprint in growth markets," said Arun Sarin, the British firm's India-born chief executive.
Bharti chairman Sunil Mittal said the 10 per cent included the entire 5.65 per cent stake of New York private equity firm Warburg Pincus. The other 4.4 per cent will be held through a Vodafone purchase of part of Bharti Enterprises Pvt.
Singapore Telecommunications owns more than 30 per cent of Bharti, which operates with GSM technology like Vodafone in most of its markets.
Just last week, India approved new rules allowing up to 74 per cent foreign equity ownership in Indian telecoms providers, up from 49 per cent before. On Thursday, Bharti reported a weaker-than-expected 43 per cent rise in second-quarter consolidated profit to 5.21 billion rupees.
After dropping more than seven per cent on Thursday, shares in Bharti rose five per cent by 7:51 a.m. yesterday to 327.30 rupees, valuing the company at more than $13.5 billion.
Besides local players Bharat Sanchar Nigam Ltd, India's second-ranked GSM operator, and Reliance Infocomm, which uses rival CDMA technology, Bharti also competes with Hutchison Essar Telecom - the local wireless operation of Hong Kong's Hutchison Telecommunications International (Vodafone said it was paying 66.56 billion rupees, or £820 million, in cash for the 10 per cent of Bharti Tele-Ventures. Bharti Enterprises will maintain a controlling interest of 45.9 per cent in Tele-Ventures.
In June 2003, Vodafone sold its 20.76 per cent stake in RPG Cellular to Indian mobile phone group Aircel, the largest mobile phone company in the southern state of Tamil Nadu, because it did not give Vodafone a strong enough position in the country.