Vodafone Group Plc’s share price down, buys an 11% stake in its Indian unit in a deal estimated to 1.5 billion dollars

Vodafone Group Plc made an official announcement, that it has reached an agreement with Piramal Enterprises Ltd to buy out Piramals stake in its mobile-phone unit in India. The deal equals 11% of Vodafone India and is estimated to 89 billion rupees (1.48 billion dollars). According to Piramal, the company is valued at 1,960 rupees per share.

The deal was part of Vodafone Groups plan, revealed in October 2013, to take full control of the unit in India for a total of 101.41 billion rupees due to a considerable change in the rules, which now allow overseas companies to hold 100% of telecommunication carriers located on the territory of India.

The 11% stake in the Indian division of Vodafone Group Plc was bought by Piramal Enterprises Ltd for 58.64 billion rupees. Now the same stake is expected to be acquired by Prime Metals Ltd, which is an indirect subsidiary of Vodafone.

One of the analysts, who work for Nirmal Bang Equities Ltd – Harit Shah, said in a telephone interview for Bloomberg: “This was part of Vodafone’s strategy to increase their stake in the Indian unit and pure profit booking for Piramal. The group is flush with cash from their Verizon deal and are using it to scale up in markets such as India, where data traffic is showing 70 to 100 percent growth year on year.”

The company first set foot in the country in 2007 with the acquisition of the local cellular assets of Hutchison Whampoa for 11 billion dollars. In February this year, Vodafone got the approval of countrys government to purchase stakes from its minority Indian partners – Piramal and Indian businessman Analjit Singh.

According to Financial Times, shares of Vodafone Group Plc lost 0.66% to 218.55 GBP on the LSE today, while companys one-year return rate 12.69%. The same media reported that the 21 analysts offering 12-month price targets for Vodafone Group Plc have a median estimate of 250.00, with a high estimate of 290.00 and a low estimate of 215.00. The median estimate represents a 13.64% increase from the last price of 220.00.