Jan 30, 2017
Vodafone India/Idea: tamasha smasher
Why else would it speak of an equal partnership? Birla controls only about 40 per cent of Idea, which is, in any case, smaller than Vodafone India. The enterprise value of privately held Vodafone India must be some $13bn, even after Vodafone took a $5.3bn writedown in November. Holding a controlling stake in an expanded Idea Cellular with Birla via a joint venture would allow Vodafone to deconsolidate a subsidiary that contributes little free cash flow. Vodafone would remain exposed to a market of 1.2bn increasingly data hungry people, in the expectation that Jio will one day stop buying market share and small participants will disappear. Vodafone is excluding its 42 per cent stake in infrastructure group Indus Towers.
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