Vodafone in talks with Analjit, others for 1.5% Stake Sale

Vodafone Plc was in talks with its partner Analjit Singh and other investors to decide on who would pick up the 1.5-per cent stake in its Indian venture. With Vodafone buying out Essar-s 33- per cent stake for $5 billion, it will need an Indian investor to pick up this stake. Else, it would breach the foreign direct investment (FDI) cap of 74 per cent in the telecom sector. Vodafone has already paid $1.9 billion to the Essar group as part of its first tranche.

Vodafone Plc Group Chief Financial Officer Andy Halford said, “The Essar deal will be finalized in nine months. We are talking to Analjit Singh, who is already a partner, and have got interest from a number of parties. We can give the stake to an existing investor or even a new one. Analjit Singh holds 6.2-per cent stake in Vodafone Essar, while the rest is being held by IDFC.”

The company is also seeking approval from the Advance Tax Tribunal, on whether it has to withhold any tax amount in the deal with Essar. The final view is expected to be out in the next few weeks.

Vodafone had bought a 10-per cent stake in Bharti in 2005, both directly and indirectly, for $1.5 billion. But it sold half of its stake in Bharti after it acquired Hutch's stake in India. It now holds 4.39 per cent indirectly through unlisted Bharti Telecom.

Vodafone Plc also said it would go in for an initial public offer only in 2012 after the contentious tax issue, under which it has a liability of $2.5 billion to be paid to the country's Income Tax Department, is finally decided. The hearing in the Supreme Court is scheduled for mid-July.