'Hutch-Essar best fit for Vodafone, REL'
Fitch said a long-drawn bidding war might lead to a much higher acquisition cost for the winner.business Updated: Sep 10, 2012 12:09 IST
Rating agency Fitch on Friday said that British giant Vodafone and domestic telecom major Reliance Communications (RCL) -- the two front-runners in race for India's fourth largest mobile player Hutch-Essar, stand to gain the most from a deal.
While mentioning that Friday has been set as the last date of submission of bids by various suitors, Fitch said a long-drawn bidding war might lead to a much higher acquisition cost for the winner.
This could also adversely impact the financial profile of the acquirer if substantial dent is incurred to fund the deal, the rating agency said adding the strategic value of Hutch would be most significant for Vodafone and RCL.
It said the competition for Hutch is aggressive and the counter parties are reportedly willing to pay around 20 billion
dollar for Hutchison Telecommunications International Limited's (HTIL) 67 per cent stake in Indian mobile venture.
The major contenders include Vodafone, RCL, Essar Group, Egypt's Orascom Telecom and Hinduja Group. "Hutch will not only be a good fit for Vodafone's portfolio but the robust growth in India could also help offset slowing growth in the group's traditional West-European markets," the agency said.
UK-based Vodafone has an impressive footprint spanning 27 countries but has a limited exposure to Asia, which has some of the fastest growing telecom markets. Fitch said the merger of RCL and Hutch would radically alter the competitive scenario.