Bharti Airtel, India’s largest telecom service operator, may soon buy back its 4.4% equity stake from Vodafone Plc.
 
Highly placed sources close to development told TelecomTiger that the two companies started negotiation early this month. Negotiations are still at an early stage.
 
Both the operators have applied for Unified Licence for Kolkata Circle. They had won spectrum in Kolkata Circle in February auction. Their existing licence will expire in November. Under new licensing norms cross holding is not permitted.
 
"In the event of holding/obtaining Access spectrum, no licensee or its promoter(s) directly or indirectly shall have any beneficial interest in another licensee company holding ‘Access Spectrum’ in the same service area”: new licensing norms state.
 
Therefore, Vodafone will be required to sell its equity in Bharti Airtel in one year.
 
In a letter to the department of telecom (DoT) in July 2013, Vodafone had said that it owned 4.4% stake indirectly in Bharti Airtel.
 
It had picked up a 10% stake in Bharti Airtel in 2005 for $1.5 billion. However, after acquiring majority stake in Hutch-Essar for $10.9 billion in 2007, Vodafone entered into a share sale agreement with Bharti to sell back the 5.7% direct stake in Bharti Airtel for $1.6 billion.
 
Vodafone continues to hold its 4.4% indirect stake in Bharti Airtel.

                         
 
Earlier, in December, Vodafone Group CEO Vittorio Colao had said: “This stake is not in Bharti. It’s a stake in holding company privately owned by the Mittal family and I think its sitting there and one day it will be worth something but for the time being there is no buyer .”
 
“I am sure we will find a solution which is respectful of the law.”
 
Under new rules, it becomes mandatory for them to offload their stakes. The two companies will get Unified license in November. Then they will have one year to offload their stake, ie, till November 2015. So they have enough time to cut this deal.
 
However, DoT sources say that both telecom companies will have to give undertaking to comply with Unified License norms. Only then they will be issued licence.
 
At present market capitalization of Bharti Airtel, the value of deal would be worth Rs 5,860 cr.