Update: Vodafone considers listing in India
Vodafone has confirmed it is considering listing its majority owned Indian subsidiary, Vodafone Essar.
Any plan to list the company is primarily dependant on the completion of Vodafone’s $5 billion buyout of the Essar group, which has a 33% stake in Vodafone Essar. Vodafone confirmed the potential buy out will be in line with Indian regulations, which limits foreign ownership of an Indian company to approximately 74%.
The UK based operator is presently involved in a tax row with the Indian government and were billed $2.6 billion in tax for the acquisition of Hutchison Essar in 2007. The company has since appealed the decision and denies any wrongdoing in the case because the transaction was completed in Hong Kong.
Steven Hartley, principal analyst of telco strategy with Ovum explains that this move would appease regulators by making Essar correspond to foreign ownership regulations but also by raising capital in the region: “Deploying 3G combined with low ARPU in India, would need an injection of cash and an IPO (or partnership) is a way of doing that without Vodafone taking the full burden.”
In light of the tax row, Vodafone chief executive Vittorio Colao has since conducted several interviews with Indian media to improve the company’s image in the country.
A decision to list Vodafone in India is expected by the end of 2011 and Hartley believes it boils down to whether they can find a partner willing to pay the desired price to make listing a possibility. “Even if they don’t it’s a good public statement of intent to appease the regulators," he added.