Vodafone is already going through the process of deciding how to spend some of the cash from its Verizon deal, it seems. An immediate target will be consolidation in India. Here, the UK-based giant could spend as much as $2bn to buy out minority stakeholders in its Indian subsidiary, as the Indian government removes its caps on foreign ownership of telcos.
Vodafone is currently limited to a 64% stake in its Indian arm, which is a source of strong growth, but plans to file an application with the Indian government later this month, to increase this, perhaps to 100%.
One challenge Vodafone will not be taking on is to enter another of the key BRIC growth markets, Brazil. It had been reported to be interested in acquiring TIM Participacoes, Telecom Italia’s Brazilian venture, in the wake of the Italian incumbents ongoing restructuring and financial difficulties. Vodafone denied the speculation, and it seems intent on strengthening its existing footprint. Its emerging market strategy is mainly focused on India, Africa and the Middle East, rather than taking on the two giants of Latin America, Telefonica and America Movil. It has a policy of either divesting minority stakes, as it is in the US, or trying to increase them to gain full control, as it has been pursuing in South Africa and India.
In the latter market, Vodafone sources said it was considering a spend of up to $2bn to buy out minority shareholders. These include Ajay Piramal, who owns 11% and is also Vodafone India’s chairman. He has said he was planning to sell his shares by early 2014. The other 25% is owned by unnamed minority stakeholders, and Vodafone would not necessarily look to buy them all out, as long as it has effective control.