Vodafone Group Plc said it has started preparations for an initial public offer (IPO) of its Indian business.
India is a significant contributor to the Vodafone group and it is the largest data traffic market by volume as well as the third-largest contributor to the group’s service revenues.
“We have recently begun preparations for a potential IPO of Vodafone India, subject to market conditions,” the London-based Group said in a statement.
Last month, Vodafone Group chief executive officer (CEO) Vittorio Colao had said that the company had started preparatory work for the IPO.
“I cannot give you a date, but I can tell you (that) we are positively inclined to an IPO and have started some preparatory work,” Colao had said on his visit to India in October.
The telecom major today said its service revenue — excluding the regulatory impact — in India has grown 11.2 per cent to Rs 22,902 crore for the first half of the ongoing fiscal, driven by customer additions and robust growth in data against Rs 20,601 crore in April-September 2014.
Vodafone India’s mobile customer base grew 8.2 per cent to 188.2 million at the end of September 2015 against 173.8 million in the year-ago period.
The group had in May asked investment bank Rothschild to compile a report about the benefits of a possible IPO, which would provide the company with cash for its India plans.
The share sale will also offer investors an opportunity to reap dividends from a market where wireless growth is outpacing that of more mature countries such as Vodafone’s home market, the UK.
The company has been considering an Indian IPO for several years, but has held back because of regulatory and tax issues in the country.
Vodafone is India’s second largest wireless mobile operator with a market capitalization of about 9.3 billion pound, and an enterprise value of 11.4 billion pound, according to analysts at Citi.
The Indian division’s earnings before interest, taxes, depreciation and amortization reached 1.28 billion pound on sales of 4.3 billion pound in 2014-15. India accounts for about 10 per cent of the group’s revenues.
Vodafone in January said that it has invested more than 12.8 billion pound in India since 2007. In 2013, it committed to invest about Rs 8,500 crore annually.
In addition, the company acquired spectrum for about Rs 25,959.74 crore in March and has plans to expand 3G service network from 9 circles to 16 circles.