Vodafone Buys Essar's 33% stake
Country’s second largest mobile service operator in terms of revenue and third largest in terms of subscribers, Vodafone Essar has announced that the Essar Group has exercised its put option over 22% of Vodafone Essar Limited (VEL).
After the exercise by the Essar Group of its underwritten put option, Vodafone has exercised its call option over the remaining 11% of VEL owned by the Essar Group leading to a total cash payment of US $5 billion.
UK-based telecom major, Vodafone Plc and IDFC and Analjit Singh, its two Indian shareholders, will buy Essar’s stake at a predetermined rate. The final settlement is slated for completion by November, 2011.
The published net debt figure of the Vodafone Group already includes this $5 billion. Vodafone is the world’s second largest mobile communications group when it comes to revenue with around 359 million subscribers in its controlled and jointly controlled markets as on 31st December, 2010.
Vodafone Essar has existed in various forms since it commenced operations as Max Touch in Mumbai telecom circle which was back in the mid 1960s. It was later renamed as Orange and Hutch subsequently. Vodafone took a controlling interest in the company and resulted in a joint venture with Essar/Ruia Group in which it received the acquisition of 33% stake. After today’s transaction the UK-based parent company will hold 75.4% stake in Vodafone Essar while the Indian unit will hold the remaining 24.6%.