Vodafone takes Hutch, woos Essar
The UK telecom giant wins 67% stake in India's fourth largest mobile venture for $19 billion, reports Arun Kumar.india Updated: Feb 12, 2007 03:51 IST
The scramble is over. Of the four contestants vying to buy into Hutchison Essar, the British telecom giant Vodafone Plc has emerged the winner.
On Sunday, Vodafone, the world's largest player in GSM mobile telephony, acquired Hutchison Telecommunications International Ltd's (HTIL) 67 per cent stake in Hutchison Essar with its bid of $19 billion (Rs 85,000 crore). A formal announcement by HTIL is expected to be made on Monday.
Vodafone has already extended an olive branch to Essar, which holds the remaining 33 per cent stake in Hutchison Essar, and which was also among the bidders for the HTIL stake. It would like Essar to continue as its local partner. Essar has yet to decide whether to accept the offer, or to sell its stake as well. "We are at the moment evaluating all our options," said Ravi Ruia, vice chairman, Essar group.
Since existing regulations in the telecom sector allow a foreign company to hold only 74 per cent stake, Vodafone will have to find an Indian partner in case Essar decides to exit. Such a partner would have to invest $5 billion in the venture to acquire the 26 per cent stake mandated, without getting any management control in return.