Vodafone is considering taking advantage of India's new relaxed foreign ownership rules to increase its stake in Indian unit Vodafone India, according to multiple reports.
Vodafone India plans to file an application with India's Foreign Investment Promotion Board (FIPB) to increase its direct stake in Vodafone India beyond the current 64.4%, Reuters, Bloomberg and the Financial Times have all reported, citing sources.
Two of the reports state that Vodafone is considering investing as much as $2 billion to buy out minority shareholders, but they differ on whether this means the company is considering raising its stake to 100%.
Besides its 64.4% direct interest in the Indian mobile giant, Vodafone indirectly owns a further 20.1% through subsidiaries it doesn't control.
In July, the Indian government removed a restriction on foreign companies directly owning more than 74% of a telecom operator, so long as the foreign entity receives approval from the FIPB. If Vodafone increases its direct stake beyond the previous cap, it will be the first to take advantage of the new rules.
Vodafone is in for a $130 billion windfall from the sale of its 45% stake in Verizon Wireless. Although it plans to return most of the proceeds to shareholders, the company will still have cash for potential deals.
The expected investment is a sign that Vodafone still has faith in the Indian market, despite its protracted battle with local tax authorities and the regulatory uncertainty arising from the 2012 2G spectrum scandal.