Vodafone moves nearer Indian IPO

The mobile phone giant Vodafone has taken a major step towards a possible £10bn stock market float for its Vodafone India subsidiary, VIL, as former co-owner Essar completed its exit from the business yesterday.

The Indian pharmaceutical firm Piramal Healthcare is buying Essar's last 5.5 per cent stake in VIL for £385m cash, taking Piramal's shareholding to 11 per cent. Vodafone said Piramal could take part "in a potential initial public offering of VIL" or a sale of its stake to Vodafone.

Piramal's purchase values VIL at £7bn, but analysts reckon the eventual valuation will be higher.

Espirito Santo said: "This looks way too low to us – probably explained by the small, illiquid and nature of the stake ... We assume Piramal would not have entered into the transaction if it did not see an opportunity to create value in the eventual IPO."

Under India's strict foreign ownership rules, the British mobile giant cannot own 100 per cent of VIL, so Vodafone must have a local partner.

Separately, merger talks between Vodafone and Greece's Wind Hellas collapsed yesterday, amid speculation European regulators had signalled their opposition to a deal that would have left Greece with just two main mobile operators.