(28 October 2005 8:00 pm)

MUMBAI: India's rapidly expanding phone market is attracting the interest of foreign companies. Vodafone Group, the world's biggest mobile-phone company, is buying 10 per cent stake in Bharti Tele-Ventures Ltd (BTVL) for approximately Rs 67 billion ($1.5 billion).

Vodafone will buy out the entire 5.6 per cent stake Warbus Pincus held in BTVL. The other 4.4 per cent will be through the purchase of part of Bharti Enterprises Ltd, according to an official release. Bharti Enterprises maintains a controlling interest of 45.9 per cent in BTVL through its subsidiary, Bharti Telecom Ltd. Singapore Telecommunications owns around 30 per cent in Bharti Tele-Ventures.

Recently, the government had allowed foreign companies to invest up to 74 per cent in Indian phone companies. Earlier, the cap on foreign investment was 49 per cent. Vodafone had exited from India a few years back after selling its minority stake in RPG Cellular to Aircel, the largest mobile operator in Tamil Nadu.

Commenting on the deal, Bharti chairman and Group managing director Sunil Bharti Mittal said: “We are delighted that Vodafone has made a call on the Indian telecom sector and has chosen BTVL to be the vehicle to develop its continued interest in the Asian region. Bharti has had the privilege of tying up with ‘best in class’, blue chip companies, from around the world who have come and joined hands with Bharti, at different stages, to develop the telecom sector in India. At the time when the western world started hanging up on India, it brought in Asia’s telecom powerhouse, SingTel, to replace Telecom Italia and British Telecom.

Warburg Pincus, making its second largest investment in the history of the firm, supported the company in developing the strategy and investor focus, in its public listing. Today, when Bharti stands on the threshold of being an Asian telecom powerhouse, it has tied up with Vodafone to take the company to the next level and to support Bharti in achieving its vision of making Airtel the most admired brand in India. Bharti is fortunate to have four strong pillars to achieve its vision.

The entrepreneurial leadership of Bharti Enterprises, the Asian telecom powerhouse – SingTel which will continue to be our leading partner, the world’s largest telecom operator – Vodafone and, the most important one, a world-class management team.”

Added Vodafone Group PLC CEO Arun Sarin: “We are entering a relationship with a major company, which shares our vision and values and understands, as we do, the enormous potential of mobile telephony in society. This transaction is consistent with Vodafone's strategy of developing our global footprint in growth markets, where we can create value for shareholders.”

Bharti Tele-Ventures is one of India's leading private sector provider of telecommunications services with an aggregate of 15.13 million customers as of end of September '05, consisting of approximately 14.07 million mobile customers. The company is the only operator to provide mobile services in all the 23 circles in India. It also provides telephone services and Internet access over DSL in 15 circles.