New Delhi: The government is understood to have cleared Vodafone’s application to acquire majority stake in Hutch-Essar Ltd, paving way for the world’s largest mobile firm by revenue to start operations in India.
Finance Minister P Chidambaram on 4 May approved Vodafone’s application following the clearance by Foreign Investment Promotion Board last week, sources in the know of the development said.
FIPB had cleared Vodafone’s deal to acquire controlling stake in Hutch-Essar, India’s fourth-largest mobile operator, after scrutinising the foreign shareholding in the company.
Vodafone had bought the stake from Hong Kong’s Hutchison Telecom International for $11.08 billion in February this year.
Indian partner Essar holds 33 per cent stake in HEL. Of this, 22% is through companies registered overseas.
Of the remaining 67 per cent stake, 52% was earlier directly held by HTIL and the balance controlled by it through entities belonging to HEL managing director Asim Ghosh, Max India chief Analjit Singh and IDFC.
India’s FDI policy permits only 74% foreign ownership in telecom companies.
A controversy had erupted after it was alleged that the 15 per cent stake was also indirectly held by HTIL or its affiliates, and this would continue after Vodafone’s takeover.
This would have meant that the total foreign ownership in HEL breaches the 74 per cent limit. However, FIPB had ruled that this 15 per cent stake was held by resident Indians and not by any foreign player.