Vodafone May Be Forced to sell $1B Airtel stake

According to reports appearing in the Indian press, Vodafone Group may be forced to sell its 4.4 per cent stake in rival Bharti Airtel in order to comply with new rules about cross ownership among mobile operators. The stake worth over $1 billion might soon be up for grabs soon.

With the new regulations published on Friday, no carrier can be allowed to hold a direct or indirect stake in a rival operating in the same segment.  India has 22 licensing ”circles” with Bharti and Vodafone being the country’s number one and two operators being present in every service area.

The previous rules allowed cross ownership of up to 9.9 per cent. Rules apply when the current licenses expire with the operators being given 12 months to sell stakes “illegally” held in rival operators.

Vodafone will have its licences in Delhi, Mumbai and Kolkata expire around the end of 2014. Its license for operation in the Madhya Pradesh state is expected to expire in 2027.

With the arrangement, the Indian government hopes to eliminate duopoly and cartel-like behaviour.

The current arrangement means that Vodafone has stake both in Safaricom and Airtel in Kenya.