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Cabinet clears Vodafone's Rs 10,141 crore FDI proposal

"The Cabinet Committee on Economic Affairs has approved the proposal of CGP India Investment Ltd for increase in foreign equity in Vodafone India Ltd from 64.38 per cent to 100 per cent," an official statement said.  After this, Vodafone India will be the first telecom operator to be fully owned by a foreign firm.

The headquarters of Vodafone Germany are pictured in Duesseldorf . Reuters The headquarters of Vodafone Germany are pictured in Duesseldorf . Reuters

UK-based Vodafone  Group Plc  on Thursday secured approval of the Cabinet to buy out minority shareholders in its Indian arm for Rs 10,141 crore, the single largest foreign investment in the country's telecom sector.

After this, Vodafone India will be the first telecom operator to be fully owned by a foreign firm.

"The Cabinet Committee on Economic Affairs has approved the proposal of CGP India Investment Ltd for increase in foreign equity in Vodafone India Ltd from 64.38 per cent to 100 per cent," an official statement said.

The Foreign Investment Promotion Board (FIPB) had on December 2013, cleared the proposal of CGP India, an indirect Mauritian subsidiary of Vodafone International Holdings BV.

Since the proposal was worth more than Rs 1,200 crore, it had to be referred to the Cabinet.

Vodafone , which entered India in 2007 by buying Hutchison Whampoa in Hutchison-Essar Ltd in a $11 billion deal, directly holds 64.38 per cent stake in Vodafone India.

"The approval would result in foreign investment of approximately Rs. 10,141 crore being received in the country," the statement added.

Last year, the government had allowed 100 per cent FDI into the telecom sector.

The telecom firm will buy remaining outstanding shares from minority shareholders-Ajay Piramal and Analjit Singh.

Piramal holds an 10.97 per cent stake in India's second- largest telecom company by subscribers, while Singh, who is Vodafone India's non-executive chairman, holds 24.65 per cent.

Vodafone Group Plc will pay Analjit Singh Rs 1,241 crore and Piramal Enterprises Rs 8,900 crore for their stakes in Vodafone India as part of the proposal.

Vodafone India holds about 42 per cent in telecom infrastructure firm Indus Towers, which operates in 15 of its 22 service areas and owns 1,12,615 mobile towers.

During 2013, Indus Towers revised its accounting for energy cost recharges to operators from a net to a gross basis, to reflect revised energy supply terms.

"The impact of this upward revenue adjustment has been excluded from reported organic growth rates," Vodafone said.