Vodafone has agreed to acquire, through wholly-owned subsidiaries, an economic interest of 10% in Bharti Tele-Ventures Limited (“BTVL”) (the “Transaction”) for a cash consideration equivalent to Rs.66.56 billion (£0.82 billion).

Commenting on the Transaction, Arun Sarin, Chief Executive of Vodafone, said: “I am delighted to announce this strategic partnership with BTVL, the leading national mobile operator in India. Together we will take this venture to a new level as clear leader in this market.

We are entering a relationship with a major company which shares our vision and values and understands, as we do, the enormous potential of mobile telephony in society. This transaction is consistent with Vodafone’s strategy of developing our global footprint in growth markets, where we can create value for shareholders.”

Commenting on the Transaction, Sunil Bharti Mittal, Chairman and Group Managing Director of BTVL, said: “We are delighted to have Vodafone as our additional partner to further develop the Indian telecom market. It is a matter of great pride for all of us at Bharti that Vodafone has made its entry into India by way of a partnership with Bharti. Today when Bharti stands on the threshold of being a telecom powerhouse, the partnership with Vodafone will help in achieving its vision of making Airtel the most admired brand in India.”

The consideration paid is equivalent to a purchase price of Rs.351 per BTVL share and represents a 7.4% premium to the 5-day average share price of BTVL on 27 October 2005.

Vodafone has entered into an agreement to acquire: 

•  a 4.39% economic interest in BTVL through Bharti Enterprises Private Limited (“Bharti Enterprises”)

• a 5.61% direct interest in BTVL from Warburg Pincus LLC (“Warburg Pincus”)

The Transaction is expected to be immediately enhancing to adjusted earnings per share and will have no impact on Vodafone’s share purchase programme.

The principal benefits of the Transaction to Vodafone are that it provides:

• Expansion of Vodafone’s footprint into India, a large and under-penetrated market of global importance with significant growth potential 

– 4th largest economy in the world in PPP-adjusted terms with a population of 1.1 billion

– 3rd largest mobile market in Asia with 65.1 million customers currently, after China and Japan where Vodafone is already present

– mobile and fixed line penetration currently at approximately 6.0% and 4.4%, respectively

– 53.3% year-on-year mobile market growth, representing 22.6 million customer additions

• Investment in the fastest growing mobile operator in India

– strong and highly respected management team

– 14.1 million mobile customers as at 30 September 2005, equivalent to a 21.8% customer market share

– one of only three Indian mobile operators with a nationwide footprint

– in the six months ended September 2005, BTVL’s mobile business delivered year-on-year growth of 62% in customers, 58% in revenues and 64% in EBITDA

– in the six months ended September 2005, BTVL’s fixed line business delivered year-onyear growth of 39% in customers, 30% in revenues and 34% in EBITDA

• Active role in the partnership

– the Transaction delivers material rights in BTVL as a result of which Vodafone is expected to proportionately consolidate BTVL

– Vodafone will have the right to appoint two directors to the BTVL Board

The acquisition of shares from Warburg Pincus is not subject to regulatory approval and is expected to close by the end of November 2005.

The acquisition of shares in Bharti Enterprises is conditional on receipt of all necessary unconditional regulatory approvals and certain customary conditions. The economic closing of this part of the Transaction is expected to occur in the first quarter of the calendar year 2006.