Vodafone India, the nation's second-biggest telecom firm, has put on hold a planned initial public offering (IPO) over lack of clarity on rules around spectrum and cellular permits.
The British telecom giant Vodafone Group Plc's India arm had planned to list locally
after an IPO but it is currently focused on extension of its licences in key circles of Mumbai, Delhi and Kolkata, that are coming up for renewal in November 2014.
"At this moment we have put that (IPO) on hold because we need first clarity about our licence extensions and the pricing of spectrum," Vodafone India Managing Director and Chief Executive Officer Martin Pieters said.
The telecom operator had sought the extension under Clause 4.1 of the licence agreement. The government can extend the period of licence by 10 years at one time if the request is made by the operator during the 19th year of the licence period.
However, the government has rejected the telecom major's demand for extension and asked Vodafone to bid for airwaves
to continue services in its areas.
Pieters, though, welcomed the government's decision to allow 100 per cent foreign direct investment (FDI) in the telecom sector.
"100 per cent FDI was welcomed by Vodafone because we think that we need more growth opportunity in the future financially and actually Indian ownership was a restriction," he said. "...if you want to strengthen your balance sheet by bringing in equity, your Indian partner is also required to bring in equity which is of course tough."
Meanwhile, the parent company has sought FIPB approval to invest
Rs 10,141 crore in raising its stake in the Indian arm to 100 per cent.
The UK-based firm will buy out minority investors, including billionaire industrialist Ajay Piramal who holds 11 per cent stake in Vodafone India. The remaining 25 per cent interest is with undisclosed minority shareholders, who are understood to include Analjit Singh, chairman of Vodafone India.