The world’s largest telecom group in terms of revenue, Vodafone Group Plc., is all set to sell its smaller stakes all around the world, and in the process will sell its indirect minority equity stake of 4.39% in Bharti Airtel. The Chief Executive for Vodafone, Vittorio Colaco, claimed that the company was not interested in managing the minority investments. Their “minor” stakes at Bharti Airtel is valued at 5,200 crore.
Vodafone had aquired 10% stake at Bharti Airtel for around $1.5 billion in 2005 in a tie-up with the Mittals who own Bharti. However, The UK telco giant sold 5.6% stake in Bharti back to its promoters Mittals for $1.6 billion. Now it looks like Vodafone are ready to sell the remaining stakes back to Mittal, or to Singtel, the other stakeholder at Bharti.
One might think that maybe Vodafone incurred loses which might have pushed the company into selling the minority stakes. Au contraire, the Indian operations arm of the company posted a revenue growth of 13.8% inQ1 of 2010. So what prompted this move? This can be attributed to Ontario Teachers Pension Plan, which holds a 0.42% stake at Vodafone. The OTPP are not happy with the acquisition record of Vodafone, and are demanding board-level changes. OTPP says, “For at least the last five years, the company has had significant structural and strategic weaknesses, resulting in Vodafone trading at a substantial, persistent discount to its asset value,”
Vodafone bought Telesim, Turkey’s second largest mobile operator in 2005. Unfortunately, the bad performance by the Turkey division coupled with the average performance of the Spanish division, forced Vodafone to make a £5.9bn writedown in 2009.
Even after selling the stakes in Bharti, Vodafone will have stakes in China Mobile (3.2%), SFR in France (44%), and Verizon Wireless (45%).
