Vodafone's purchase of 10% stake for approximately $1.5 billion in Bharti Tele-Ventures Ltd indicates that the Indian telecom story has become big for global players. It also reinforces India's attraction for private equity, Warburg Pincus having made quite a killing in BTVL.
The involvement of big boys such as Vodafone also indicates there is a recognition that big bucks will drive this capital-intensive business from here on. Left to itself, the predominant local promoter may not be able to cough up its share of the required resources for expansion.
The most significant advantage is that the deal will give BTVL more than one ready partner eager to devote more resources — both SingTel and Vodafone are likely to angle for higher stake in BTVL.
These global partners will make BTVL more of a global company, even as its Indian promoter shows little stomach for global ambitions. However, it is unlikely that Vodafone and SingTel would enjoy cohabitation in one company, considering the stakes involved. Competition between the two for a larger stake will benefit not only the promoters but also investors in BTVL.