Orascom takes a dig at Essar
Naguib Swairis of Egyptian telecom company Orascom Telecom has advised Vodafone to buy out the Ruias of Essar from the joint venture Hutchison Essar.india Updated: Feb 20, 2007 01:11 IST
Naguib Swairis of Egyptian telecom company Orascom Telecom has advised Vodafone to buy out the Ruias of Essar from the joint venture Hutchison Essar. Swairis was quoted in the website telegeography.com, saying that the Ruias have been a "troublesome partner".
An Essar spokesperson said “Orascom was never our partner. They were trying to gain a backdoor entry.”
Orascom held a 19 per cent stake in Hutchison Telecom International Ltd that was a joint venture partner with the Essar group for Hutchison Essar. HTIL has decided to sell its 67 per cent controlling stake in the company to Vodafone.
Through its holding in HTIL, Orascom was holding a 10 per cent indirect stake in Hutchison Essar. The Ruias of Essar had opposed the entry of Orascom in the Indian joint venture on security grounds.
The Ruias had said that since Orascom also had operations in Pakistan they should get advance clearance from the central government before they can become a joint venture partner in an Indian telecom company.
The comments from Swairis comes at a crucial time when Vodafone and Essar are yet to sign a shareholder agreement and the Ruias are in the process of deciding whether they will continue in the joint venture. Further the fine details of the joint venture agreement are yet to be finalised and a lot depends on the agreement that the two partners finally sign.
The Essar spokesperson pointed out that HTIL chairman Canning Fok had recently said that the Hutchison and Essar have worked together to build the joint venture and that the good work has been reflected by the valuation that the company got.
The Hutchison Essar joint venture was sold for an enterprise value of around $19 billion. Apart from Vodafone, the Hindujas as well as Reliance Communication were also bidders in the final round of bidding for the Hutchison stake. Joint venture partner — Essar — was also bidding.
Orascom were also interested in bidding for the Hutchison stake at one stage but backed out probably due to the security concerns created by the Essar letter that has now virtually blocked Orascom’s entry into India.
Meanwhile the website Arabianbusiness.com reported Swairis as saying that Orascom has built up an warchest of $5 billion for acquisitions. He also said that the price that was paid by Vodafone for Hutch was too much for Orascom. The company is now looking for acquisitions in the Mediterranean region and possibly North Korea.