Vodafone Group PLC will acquire 10 percent of Indian mobile and fixed line operator Bharti Tele-Ventures Ltd. (BTVL) for 66.56 billion rupees (US$1.48 billion), the company said on Friday.
The move marks Vodafone's return to the Indian market after a two-year break. In 2003 it sold its 21 percent stake in a small regional mobile services operator, saying the company did not offer it a strong enough position in the country.
The move is a sensible one, according to U.K. analyst company Ovum Ltd. After a slow start in the early 1990s the Indian mobile market is looking good, and Bharti has an established national brand that will help Vodafone take advantage of fast growth in the region, Ovum analyst Robin Hearn said in a research note.
"All-in-all this is a good move for Vodafone's global ambitions, and though there are still plenty of growth markets out there, picking those that will deliver true value is getting harder," Hearn said.
As many as 65 million Indians already use cell phones, but that still represents only 6 percent of the potential market, Vodafone said. BTVL has 14.1 million mobile customers, or 22 percent of the current market.
BTVL also operates a fixed line business. Fixed-line penetration in India is 4 percent, and BTVL recorded 39 percent fixed-line customer growth in the six months ending in September, Vodafone said.
Under terms of the deal, Vodafone will acquire a 4.39 percent economic interest in BTVL through Bharti Group holding company Bharti Enterprises Private Ltd., and a 5.61 percent direct interest in BTVL from investment firm Warburg Pincus LLC.
Bharti Enterprises, in Delhi, maintains a controlling interest of 45.9 percent in BTVL through its subsidiary, Bharti Telecom Ltd., Bharti said. Singapore Telecommunications Ltd. holds 15.8 percent of the equity in BTVL, and also holds equity in Bharti Telecom Ltd.
In Asia, Vodafone also has a mobile network in Japan, where the company has struggled to get a foothold in the competitive and saturated market. Vodafone also owns 3 percent of China Mobile.