India Delays Approval Of Vodafone-Hutchison Deal
Published April 25th, 2007
The Foreign Investment Promotion Board this week for a third time deferred a decision on whether to approve the U.K. cellular company’s acquisition of a controlling stake in Hutchison Essar for $11.1 billion.
Last week, the Ministry of Law approved the deal.
“We have just received the law ministry’s response today in the meeting,†Industry Secretary Ajay Dua told reporters in New Delhi after a meeting of the FIPB. “It is a detailed response. We have to study it. The FIPB will meet again on Friday,†he said.
India caps foreign investment in telecom companies at 74%, and questions were earlier raised on whether Hutchison Essar was in violation of that law.
Hutchison Telecom has a direct 52% stake in Hutchison Essar, the country’s fourth-largest cellular service provider, while the Essar Group has 33%, structured in such a way that about 22% is held abroad.
The center of controversy was a 15% stake held by individual investors Analjit Singh and Asim Ghosh. Hutchison Telecom funded their acquisition of the shares and holds options to buy them, raising questions about whether it should be counted as a foreign or domestic share holding.
However, the Ministry of Law said there was no violation of foreign investment norms in the company, paving the way for the entry of Vodafone (nyse: VOD ) into the world’s fastest-growing mobile market.
Related Articles
