Vodafone India Is Going Public

This Could Turn Out to Be India’s Biggest IPO Ever

Vodafone India, the second-largest mobile operator in the country, with almost 200 million subscribers, is moving toward filing an initial public offering (IPO) in 2017. This is a significant development for the Indian telecom landscape as well as for Vodafone UK.

As an independent operator, Vodafone India would be the 12th largest in the world based on subscription count. It’s bigger than Orange, bigger than T-Mobile and bigger than AT&T. It accounts for more than 40 percent of Vodafone’s total global subscribers. It also has almost 20 percent share of the Indian market, behind Bharti Airtel, which currently has 243 million subscribers.

The Vodafone IPO is expected to raise over $3 billion, which would make it the biggest in India’s history. The cash will be used to retire debt the company incurred during a spectrum auction, allowing the operator to expand its LTE network in the country.

The build-out of India’s 4G network is just beginning in earnest. Until 2015, only Airtel had launched LTE services in India (and with very limited coverage), but this year Vodafone, along with Idea Cellular, has been catching up. Vodafone is already offering 4G services in Delhi and the National Capital Region, Karnataka, Kerala, Kolkata and Mumbai, with plans to expand its network to more cities over the coming months.

Vodafone India CEO Sunil Sood said in a statement that data usage increased by 63 percent over the past year and the company expects 4G services to be available in “1,000 towns across nine telecom circles” in the country. (Telecom circles are service areas based on population density; there are currently 22 circles in the country).

In its earnings report for fiscal 2016, Vodafone India reported a 5 percent increase in total revenue at about $7.1 billion. Its average revenue per user was $3 during the fourth quarter of 2016, up from around $2.90 a year ago. Data revenue grew 45 percent year-on-year to $1.2 billion in 2016.

The proposed share sale comes as Vodafone battles the Indian tax authorities. The Indian tax department and Vodafone have been locked in a dispute since 2007 over the company’s $11 billion acquisition of Hutchison Essar. The tax demand, which was initially about $1.3 billion, has now more than doubled to about $3.3 billion including interest and penalties.

India is enjoying encouraging economic growth, and with a new government firmly in place the outlook for the telecom sector looks upbeat. Vodafone, which considers India as a key growth market, has had to overcome significant challenges in the last couple of years. However, Vodafone’s resolve is finally paying off as it’s poised to benefit from the huge potential the market has to offer.