Vodafone-Essar deal not approved by FIPB

Telecom major Vodafone suffered a setback today after the Foreign Investment Promotion Board (FIPB) disapproved of its bid to acquire Essar's 11% in Vodafone-Essar, reports CNBC-TV18's Aakansha Sethi

Mauritius-based Prime Metals, an indirect arm of Vodafone International, had sought FIPB nod to acquire 5.48% of Vodafone-Essar. The FIPB nod is required for the USD 600 million investment in Vodafone-Essar.

Prime Metals holds 1.53% stake in Vodafone-Essar incorporated in 1992. After ETHL sells its 10.97% stake to Prime Metals, its shareholding will go upto 5.48%.

This would take the total foreign shareholding in Vodafone-Essar to 69.86%. As per current FDI norms, if there is a shareholding above 49% in the telecom sector, FIPB approval is required.

The deal will also need to get clearance from Cabinet Committee on Economic Affairs (CCEA) as deals size is large.

The Home Ministry and Telecom Ministry are yet to comments on the deal.

Source: http://www.moneycontrol.com

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