The spill-over effect of Vodafone’s battle with Indian tax authorities may prove costly for several other deal makers. The Central Board of Direct Taxes (CBDT) has reopened about 400 cases of big and mid-sized transactions that took place during the past six to seven years.
According to sources close to the development, the cases include foreign corporates and PE firms selling stakes of companies based in India, and not paying any capital gains tax. One of the first such cases that the tax department is currently probing is Montreal-based Alcan Inc’s selling of the controlling stake in Indian Aluminium Company (Indal) to Hindalco Industries seven years ago, sources in the finance ministry told SundayET.
Significantly, there were around 300 PE deals clocked in India in 2006 alone. The tax department had earlier slapped a notice on Vodafone Essar, demanding $2 billion as capital gains tax over its $1-billion acquisition of a majority stake in Hutchison Essar, India’s fourth largest mobile telephone company. The case is now locked in the Bombay High Court.
Source: Economic Times
Showing posts with label Vodafone. Show all posts
Showing posts with label Vodafone. Show all posts
Monday, December 10, 2007
Bharti, Idea and Vodafone Essar come together to form a tower company
GSM mobile operators Vodafone, Bharti and Idea Cellular will jointly set up an independent tower company, Indus Towers, to share passive infrastructure with all telecom players to enable lower cost and a more competitive operating environment .
Bharti and Vodafone will own 42 per cent stake each in the tower company, with Idea will hold the balance 16 per cent. Indus Towers will be an independently managed and operated company.
The mobile phone companies will merge their existing assets, and the new infrastructure company will have 70,000 sites, which will be shared in 16 circles. In addition to telecom companies, service providers such as broadcasters and broadband service providers would also share the infrastructure, Vodafone said in a statement.
"Indus Towers will enable optimisation of future tower rollout and enhanced operational efficiency leading to operational expenses and capital expenses savings for its customers," it said in the statement.
Source: domain - b
Bharti and Vodafone will own 42 per cent stake each in the tower company, with Idea will hold the balance 16 per cent. Indus Towers will be an independently managed and operated company.
The mobile phone companies will merge their existing assets, and the new infrastructure company will have 70,000 sites, which will be shared in 16 circles. In addition to telecom companies, service providers such as broadcasters and broadband service providers would also share the infrastructure, Vodafone said in a statement.
"Indus Towers will enable optimisation of future tower rollout and enhanced operational efficiency leading to operational expenses and capital expenses savings for its customers," it said in the statement.
Source: domain - b
Thursday, February 15, 2007
Investment banking fees in India touch $200 mn from Jan-Feb 2007
Investment banking houses in India have generated a deal fee of around $200 mn in the months of January and February in 2007, as compared to $150 mn for the total year of 2006. Total fees earned during 2006, including equity and debt capital for India, was around $500 mn. Of the $500 million, equity capital markets could have contributed around 60% while around 10% could be the debt capital market fees. The M&A transactions have contributed the remaining $150 mn. Equity and capital market deals entail issuance of shares and bonds by companies to raise money.
For multi-billion deals above $10 bn, advisory fees range from 0.1% to 0.2% of the deal size or anywhere between $10-25 mn. Global i-banks charge a minimum of $1 mn. For small-sized deals, the fee could be around 3.5% of the deal size. With corporates looking at big-ticket deals which require large syndication ability of banks, a commitment fee is also now being levied. This would ensure a minimum payment to i-banks from the deal, even if the corporate eventually loses out in the bidding battle. As deals turn complex, i-banks have also started levying ‘drop dead’ fee or non-refundable fee in case of failed transactions. This is simply to compensate for their time and effort. The bigger chunk of the fee collected by i-banks is garnered from financing and structuring the deal. This fee could range anywhere between 0.50% and 1.25% of the deal size. Fees are higher for equity transactions.
In most of the recently announced deals, European banks have been the lead advisors as Europe has been the destination for the maximum number of acquisitions by Indian corporates. In case of Tata Steel, it was ABN-AMRO, Deutsche Bank and NM Rothschild, while in case of Vodafone and Hindalco, UBS was the sole advisor.
Read more in The Economic Times article.
For multi-billion deals above $10 bn, advisory fees range from 0.1% to 0.2% of the deal size or anywhere between $10-25 mn. Global i-banks charge a minimum of $1 mn. For small-sized deals, the fee could be around 3.5% of the deal size. With corporates looking at big-ticket deals which require large syndication ability of banks, a commitment fee is also now being levied. This would ensure a minimum payment to i-banks from the deal, even if the corporate eventually loses out in the bidding battle. As deals turn complex, i-banks have also started levying ‘drop dead’ fee or non-refundable fee in case of failed transactions. This is simply to compensate for their time and effort. The bigger chunk of the fee collected by i-banks is garnered from financing and structuring the deal. This fee could range anywhere between 0.50% and 1.25% of the deal size. Fees are higher for equity transactions.
In most of the recently announced deals, European banks have been the lead advisors as Europe has been the destination for the maximum number of acquisitions by Indian corporates. In case of Tata Steel, it was ABN-AMRO, Deutsche Bank and NM Rothschild, while in case of Vodafone and Hindalco, UBS was the sole advisor.
Read more in The Economic Times article.
Monday, February 12, 2007
Vodafone buys Hutchinson-Essar for $19.3 bn
UK-based telecom giant Vodafone has made the winning bid for the 67% stake in Hutchison Essar (HEL) at an EV of $19.3 bn (Rs. 86,000 crores). This is the largest acquisition in India. Videocon has approached Essar to remain invested in Hutch with its 33% stake as the Indian partner.
Vodafone has also made similar offers to Analjit Singh and Asim Ghosh, the other existing shareholders and retain their combined stake of 12.26%. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 bn market capitalization of Bharti Airtel, the country’s largest private mobile services operator, and the $22 bn market capitalization of Reliance Communications, the second largest operator.
The acquisition will give Vodafone, which has over 200 mn subscribers globally, a strong presence in the fastest growing market for mobile services: Hutchison Essar has close to 24 mn customers.
In a related development, Vodafone has sold its 5.6% direct stake in Bharti Airtel to promoter Sunil Mittal for $1.6 bn. The deal was on a deferred payment basis. Vodafone will continue to hold an indirect 4.4% stake in the company, as a financial investor and will not have any representation on Bharti Airtel's board nor any management rights.
Read The Economic Times and Business Standard articles.
Vodafone has also made similar offers to Analjit Singh and Asim Ghosh, the other existing shareholders and retain their combined stake of 12.26%. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 bn market capitalization of Bharti Airtel, the country’s largest private mobile services operator, and the $22 bn market capitalization of Reliance Communications, the second largest operator.
The acquisition will give Vodafone, which has over 200 mn subscribers globally, a strong presence in the fastest growing market for mobile services: Hutchison Essar has close to 24 mn customers.
In a related development, Vodafone has sold its 5.6% direct stake in Bharti Airtel to promoter Sunil Mittal for $1.6 bn. The deal was on a deferred payment basis. Vodafone will continue to hold an indirect 4.4% stake in the company, as a financial investor and will not have any representation on Bharti Airtel's board nor any management rights.
Read The Economic Times and Business Standard articles.
Monday, January 29, 2007
SingTel keen on acquiring Vodafone's 10% stake in Bharti
SingTel has formally conveyed its interest in Vodafone’s 10% stake in Bharti Airtel to the British company and its advisors UBS. Vodafone has initiated talks with SingTel, Singapore’s largest telecom group, to sell its 10% stake in Bharti Airtel. As per law, Vodafone would have to dilute its holding in Bharti Airtel, if it wins the $18 bn auction of Hutchison Essar. At present, SingTel owns 30.5% stake in Bharti Airtel. Bharti Airtel is India’s biggest mobile operator with more than 30 mn customers. India is the world’s fastest growing mobile market. Analysts forecast the country will have 500 mn users by 2010.
Read the article in The Economic Times article.
Read the article in The Economic Times article.
Wednesday, December 20, 2006
Vodafone also in the race for Hutch
After Reliance, Maxis, Bharti and Essar itself, the Hutch-Essar JV seems to have found a new suitor. It seems that Vodafone, the British telecom giant, is reported to bid for Hutch-Essar. UBS, which is Vodafone’s house banker, is said to be advising the company on financing and acquisition strategies.
Both Vodafone and UBS have refused to comment on the development.
Vodafone is selling its stake in its holdings across market as it faces severe investor backlash. It sold its 25% stake in Swisscom for about $3.5 billion and a similar stake in a Belgian wireless operator to Belgacom; before that it had exited companies in both Sweden and Japan. The Japanese transaction was valued at about $16 billion.
In India, Vodafone has invested in a 10% stake in Bharti Airtel, the value of which now is estimated to be around Rs. 16, 000 crores. Vodafone might consider selling its stake in Bharti for financing the acquisition.
Read the article from The Economic Times.
Both Vodafone and UBS have refused to comment on the development.
Vodafone is selling its stake in its holdings across market as it faces severe investor backlash. It sold its 25% stake in Swisscom for about $3.5 billion and a similar stake in a Belgian wireless operator to Belgacom; before that it had exited companies in both Sweden and Japan. The Japanese transaction was valued at about $16 billion.
In India, Vodafone has invested in a 10% stake in Bharti Airtel, the value of which now is estimated to be around Rs. 16, 000 crores. Vodafone might consider selling its stake in Bharti for financing the acquisition.
Read the article from The Economic Times.
Subscribe to:
Posts (Atom)