British telecom giant Vodafone has paid a discounted price of $10.9 billion (Rs 46,870 crore) in cash for Indian mobile firm Hutch-Essar to complete a deal that gives it access to one of the fastest growing mobile markets to counter saturation in European markets.
The final price represents a reduction of $180 million from the originally agreed price of $11.08 billion, which reflects retention and closing adjustments as agreed with seller Hutchison Telecom.
The stage is now set for Vodafone to start its operations in India, which is witnessing an addition of five million new mobile subscribers every month. Hutch-Essar will become Vodafone-Essar over a period of time.
The estimated pre-tax gain from the sale is expected to be approximately $9 billion to HTIL.
The adjustments also include $352 million retention by Vodafone toward cost and expenses associated with the transactions.
The net cash inflow to HTIL before payment of the settlement amount is about $ 10.83 billion.HTIL is expected to declare a special dividend of 6.75 HK dollars per share following the completion of the necessary formalities.
Earlier, the deal was cleared by India’s Foreign Investment Promotion Board, which looked into allegations of breach of Foreign Direct Investment norms in the company.
India allows a maximum FDI of 74% in the telecom sector.
Vodafone acquired 52% direct stake of HTIL in Hutch-Essar, while Indian partner Essar holds 33% and three minority shareholders the remaining 15%.
Read more in The Live Mint article.
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