Essar seeks JVC with Vodafone
The Indian conglomerate said it wants a partnership of equals in the fourth largest mobile venture Hutch-Essar.india Updated: Feb 19, 2007 21:05 IST
Ahead of discussions with Vodafone, Indian conglomerate Essar on Monday said it wanted 'partnership of equals' and 'joint management' in the country's fourth largest mobile venture Hutch-Essar, where the UK giant is taking majority stake.
Debunking reports that it could exit the business, provided Vodafone paid a premium for its 33 per cent stake in Hutch-Essar Ltd (HEL), Essar Teleholdings CEO Vikash Saraf said, "We are the founder partner and shareholder. We will continue as a strategic partner in HEL and not as an investment partner.
"So, where is the question of seeking a premium?" he wondered and said, "The fundamental tenet of the partnership with Vodafone will be a partnership of equals where both sides have a meaningful role. This will be the basis for any agreement with Vodafone."
Discussions between Essar promoters Ruias and Vodafone are expected to start later this week for which group's Vice Chairman Ravi Ruia is slated to fly to London.
After clinching the deal to acquire 67 per cent stake in HEL for 11.1 billion dollars, Vodafone CEO Arun Sarin had visited India last week and held discussions with the Ruias.
Winding up his 3-day visit, India-born Sarin had exuded confidence an agreement with Essar would be signed soon.
Asked about Vodafone's response to the Ruias, Saraf said: "We have communicated our views. Discussions are at a preliminary stage. They (Vodafone) have also expressed almost similar views, saying that Essar can add lot of value.
"This is an early stage. But we want the shareholder agreement to address all aspects including when the partners are working together to add value and in the eventuality, if any, of either of the partner quitting." MORE
"But we would certainly like to be a part of the directional management and decision making. We are the incumbent shareholder and have our agreement with Hutchison Telecom International. The choice is with Vodafone to either partner or buy Essar out, but the last option is ruled out. And we are not there to be just the financial partner."
Asked if BPL, Mumbai Circle which is estimated to be valued at 500 million dollars, was also a point of discussion between Vodafone and Essar, Saraf said, "BPL is irrelevant as far as this partnership is concerned. There has been no talk on this. Anyway, it doesn't make either a regulatory or economic sense to merge BPL with Hutch-Essar."
Elaborating, he said that in case BPL was to be merged, then the precious spectrum would have to be surrendered. "Right now, we are consolidating BPL, which suffered quite some neglect over the last 2-3 years. Then we will think of our options to find a new home for it."
Asked to explain, he said the group could consider merger of BPL with other interested parties in the long run, possibly looking at equity swap.