Vodafone to buy 10% stake in India’s Bharti

Vodafone to buy 10% stake in India’s Bharti

	Published : Fri, 28 Oct 2005 16:05 By : James Rowe Print this Story

The world's biggest mobile phone company, Vodafone, has agreed to buy a 10 per cent stake in Indian firm of Bharti Tele-Ventures for £841 million. The deal is expected to rake in profits and Vodafone’s share buyback scheme will continue unhindered. Vodafone will acquire economic interest of 4.39% in Bharti through Bharti Enterprises Private Limited and the remaining from Warburg Pincus.

14 million mobile phone users in India out of the total 66 mobile customers belonged to Bharti at the end of September month. India's phone market is expanding as it is in the midst of an economic boom. Every month, 2.5 million new mobile connections are being added there. Despite these figures, India is a largely untapped market with a penetration rate of only 6 per cent, but the year-on-year mobile market growth is 53.3 per cent. It is also predicted that mobile phone users in India will increase fivefold to 300 million by the year 2009, according to Gartner Inc.

Only last month, Vodafone had announced plans of expansion in Asia, France, Poland and other emerging markets.

On Thursday, Bharti announced a 43% rise in quarterly profits, which was lower-than-expected. It sent the company’s shares into a plummeting. Despite this hiccup, analysts are confident that growth prospects for mobile phone are still good in India. Lower tariffs are hiking the demand too.

Arun Sarin, the Vodafone’s chief executive of Indian origin, said: "This transaction is consistent with Vodafone's strategy of developing our global footprint in growth markets".

He added: I am delighted to announce this strategic partnership with BTVL, the leading national mobile operator in India. Together we will take this venture to a new level as clear leader in this market.”

At 9.45 am, shares in Vodafone fell by a quarter of a penny to 140-3/4 as few analysts expressed concerns over the deal.

Although Vodafone’s ability to direct the dividend policy is being questioned, it has the right to appoint two directors to the board of Bharti Tele-Ventures.