European telecom major Vodafone is very, very serious about buying into Hutchison-Essar. Two senior executives of the company are currently in the capital to zero in on precisely what regulatory impediments may come in their way, and find means of overcoming them.
Meanwhile, corporate giants the Hindujas too announced their interest in Hutchison Essar, entering a fray which already has Vodafone, Anil Ambani's Reliance Communications and Essar itself competing.
Matthew Kirk, Vodafone group's director, external relationships and Neil Gough, director, international institutions met Department of Telecommunications (DoT) secretary DS Mathur for about 20 minutes on Thursday. (Kirk is also a former British ambassador to Finland) "At the meeting the Vodafone officials dwelt mainly on the government's regulations on foreign direct investment (FDI) and licence regulations," revealed a DoT official who did not want to be identified.
Bobby Leach, group media relations director Vodafone Plc told the Hindustan Times that the company would not like to comment on any such meeting.
Hinduja TMT executive chairman Ashok Hinduja confirmed that he had written to Hutchison Telecom. "I have asked them if they want to divest their stake in the joint venture. We have shown our interest in acquiring the stake. As a matter of policy we don't seek a stake less than 51 per cent," he stated.
"I am yet to get a response from them. As far as valuations are concerned, we had an internal valuation done recently and when we get a response from them, we will place our bid suitably valued," he added.
Vodafone is bullish about acquiring Hutch Essar, in which Hong Kong-based Hutchison Telecom has 67 per cent stake and India's Essar the remaining 33 per cent.
Goldman Sachs Global Investment Research group has suggested that "Vodafone can align its interests with Essar Group it will improve its chances of success in our view," since Essar Group is in an influential position as Indian regulations do not allow the same domestic telecom operator to have more than a 10 per cent stake in two operations in the same circle.
A competing operator would have to do a complete buyout and merge the acquired company's operations with its existing ones in every circle.
In addition Essar has right of first refusal on HTIL's stake if: HTIL's interest in Hutchison Essar falls below 40 per cent, or the sale is to one of Reliance, Bharti or Tata (or they have more than a 10 per cent interest in a consortium that buys the stake), says Goldman Sachs in its report released on Tuesday.
(With agency inputs)