LONDON-Vodafone Group plc announced an agreement to acquire 10 percent of India’s leading mobile operator, Bharti Tele-Ventures Ltd., for about $1.4 billion in cash.
“This transaction is consistent with Vodafone’s strategy of developing our global footprint in growth markets, where we can create value for shareholders,” said Arun Sarin, Vodafone’s chief executive.
Bharti has more than 14 million customers and a 22 percent market share in India, with revenues of about $604 million as of Sept. 30. More than $423 million of that number comes from its wireless business.
“This makes a lot of sense,” said Robin Hearn, service manager at Ovum. “After a disappointing start during the 1990s, the Indian mobile market is now looking good. Penetration is under six percent and recent growth has been both consistent and strong. The market adds over 5 million new users a quarter and over 140 million new users will enter the market over the next five years.
“So after having exited India in 2003, when it sold off a stake in a regional player, Vodafone is returning to a market from which it has been conspicuously absent, particularly given the company’s stated growth aims and the market’s obvious potential.”
Vodafone said it expects the transaction to close in the first quarter of 2006.
“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.
