DoT gives conditional nod to Vodafone’s FDI proposal

The Department of Telecom has given Vodafone Plc the green signal to increase its stake in the Indian mobile unit.

However, the DoT has asked the Finance Ministry to look into the difference in valuation being attributed to the two Indian partners from whom Vodafone is buying the stake.

According to the proposal, Vodafone will increase its holding in the Indian mobile unit from 64.38 per cent to 100 per cent by buying the 24.65 per cent stake held by Analjit Singh-promoted Scorpio Beverages Pvt Ltd and another 10.97 per cent held by Piramal Enterprises. While Piramal will get Rs 8,900 crore, the stake held by Analjit has been valued at Rs 1,241 crore.

According to an official source, the differential valuation could be due to three reasons including outstanding debt in the Analjit Singh-promoted company.

The DoT has also flagged a pending litigation filed by an NGO against the company alleging benami shareholding in Vodafone India by individuals including Analjit Singh. The DoT said that the approval to Vodafone’s proposal for increasing holding to 100 per cent should be subject to the court’s judgment on this case. Vodafone Plc plans to hold the entire stake in its Indian arm through a dozen different companies, which are existing shareholders, after it buys out the minority stake held by Indian partners. The company intends to invest Rs 10,141 crore to purchase the stake it does not currently own.

Following the buyout, the total direct foreign shareholding in VIL would be 75.35 per cent and indirect holding at 24.65 per cent. There wouldn’t be any Indian shareholding in the company post the completion of the proposed buyout, according to FIPB documents filed by Vodafone.

Source: http://cablequest.org/news/telecom-news/item/3770-dot-gives-conditional-nod-to-vodafone%E2%80%99s-fdi-proposal.htmlSource: http://cablequest.org/news/telecom-news/item/3770-dot-gives-conditional-nod-to-vodafone%E2%80%99s-fdi-proposal.html