Vodafone Group PLC has given its Indian unit permission to proceed with a public listing in India and preparations for an initial public offering are now underway, Vodafone India's chief executive has told staff.
Marten Pieters made the announcement to his staff last week, said a person familiar with the matter.
Vodafone floated the idea of a listing for its India unit in July but it didn't offer any timeframe for when that might happen.
Simon Gordon, a company spokesman, said there were no firm plans for a listing at this point but Vodafone would continue to review its options. He did not respond to queries on the potential size of the listing. The company has yet to file any documents with the Indian regulator, the Securities and Exchange Board of India, according to the SEBI website.
Vodafone Group entered India through its 2007 purchase of a 67% stake in Hutchison Essar Ltd. But it has faced a series of hurdles since.
Last month, Vodafone India's Mumbai and Delhi offices were searched by India's top federal investigative agency in relation to alleged irregularities in the allocation of additional bandwidth between 2001 and 2003.
Vodafone has denied any wrongdoing. The investigating agency also searched the offices of Vodafone's competitor and industry leader Bharti Airtel Ltd. for the same reason. Bharti Airtel has said it is in compliance with all rules.
Vodafone also is embroiled in a tax case that is being closely watched by foreign companies investing in India for clarity on the country's tax regime.
Vodafone has challenged in the country's Supreme Court a lower court order allowing local authorities to tax the company for its $11.2 billion purchase of a 67% stake in what is now Vodafone India from Hutchison Whampoa Ltd. It has also appealed against the tax body's move to seek a penalty in addition to the demand for about $2.5 billion in taxes and interest.
The Supreme Court had completed its hearings of arguments on the case in October, and a final ruling in the tax case is expected sometime in December.
Last year, Vodafone Group booked a $3.5-billion impairment charge on its Indian operations due to stiff competition and a fierce price war
Vodafone India earned revenue of $3.3 billion for the six months ended Sept. 30, up 13.4% from a year earlier, Vodafone Group said in a presentation to investors last month. Its earnings before interest, tax, depreciation and amortization stood at $836 million for the six-month period compared to $762 million a year earlier. Operating free cash flow stood at $519 million at the end of Sept. 30, the presentation added.
The company is number two in India behind Bharti in terms of number of subscribers.
Currently, India's IPO market is underperforming others globally, in terms of issuance by dollar amount, but also those of Brazil, Russia and China, which with India forms the so-called BRIC countries.
Many of the big IPO deals slated for this year have been delayed amid volatile market conditions. The amount of money raised through IPOs in India has plunged 75% this year, up until October, compared to the same period a year earlier, according to data provider Dealogic.
In the first nine months, $1.3 billion has been raised. At the start of the year, nearly 100 companies had lined up to float $11 billion, according to New Delhi brokerage firm SMC Global Securities Ltd.
read more: Olympus Wealth Management
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