Vodafone Group to sell indirect stake in Bharti Airtel

14 Dec 2009

UK-based Vodafone Group has called on interested parties to submit bids for its 4.39% indirect holding in Indian mobile network operator Bharti Airtel, according to the Economic Times. If successful in its attempts to sell the holding it is expected that Vodafone could raise up to USD2 billion, and Vittorio Colao, Vodafone’s CEO, said of the decision to sell: ‘No company will be happy with a small minority stake in another entity. If anybody is interested in buying our stake, we are for it.’ Such a sale opens up an opportunity for both Bharti founder Sunil Mittal’s family and Singapore Telecom (SingTel) to grab the stake and emerge as the largest shareholder in the cellco; the Mittals hold an approximate 30% stake at present, while SingTel has around 30.5%, although this will rise to around 32% after a recent deal announced last month to acquire a further 1.52% indirect stake in Bharti.

Vodafone Group acquired a 10% stake in Bharti Airtel in 2005 for USD1.5 billion, but sold almost half of that in 2007 when it acquired a majority stake in Hutchison Essar to enter the Indian wireless sector of its own accord. It held on to its indirect holding in Bharti however, saying it would retain it as an asset.

In addition, Colao has indicated that the British group may consider listing Vodafone Essar after 2010, although such a move is expected to be determined by whether the Ruias of the Essar Group opt to exercise an option to sell their entire 33% stake to Vodafone for USD5 billion between May 2010 and mid-2011. ‘Listing is one of the many possibilities, and it is a positive thing to do,’ Colao said, adding, ‘They [the Ruias] have a one-year window and the listing will depend on when and how much of the put option is exercised.’

India, Bharti Airtel, Vodafone Group, Vodafone India