Rivals welcome Vodafone's winning bid for Hutchison Essar

Rivals welcome Vodafone's winning bid for Hutchison Essar

	Published : Mon, 12 Feb 2007 10:24 By : Agencies Print this Story

BANGALORE (XFN-ASIA) - Vodafone Group Plc's purchase of a 67 pct stake held by Hutchison Telecommunications International Ltd in Indian unit Hutchison Essar Ltd for 11.1 bln usd, plus 2.0 bln in debt, was welcomed by local contenders, saying they would help the UK telecom firm expand the Indian market.

Vodafone has announced it will acquire the stake through its subsidiary Vodafone International Holdings BC, and finance the deal through debt and existing cash reserves.

Vodafone said it will also make an offer to buy out Essar Group's 33 pct stake in Hutchison Essar at the equivalent price per share.

Reliance Communications, which lost the bid, said it will work with Vodafone to expand the Indian market while the Essar group, which owns 33 pct of Hutchison Essar, said it will study an offer by the British firm to be its local partner, showing no inclination to press revised bids.

'We congratulate Vodafone and welcome them to India,' Anil Ambani, chairman of Reliance Communications, said in a statement.

'Vodafone's participation is a further endorsement of the exciting future growth potential, and the progressive policies, prevailing in the Indian telecom sector,' he said.

Vodafone beat Reliance Communications, the Essar Group and the Hinduja group that had all been in contention to buy the 67 pct stake held in Hutchison Essar by Hong Kong-based Hutchison Whampoa.

Including about 2 bln usd worth of debt that Vodafone is to assume, the agreement values Hutchison Essar, India's fourth-biggest mobile phone operator, at about 18.8 bln usd.

'This is a good price, which reflects the premier position of Hutchison Essar,' Essar said in a statement. 'We have been offered by Vodafone to be their partner; we are at the moment evaluating all our options in the best interest of the Group.'

Vodafone has also 'some understanding' of the strategy of Bharti Airtel, India's largest private phone company in which it has held a 10 pct stake.

The British company gave Bharti the opportunity to buy back Vodafone's 5.6 pct direct stake in it, which Vodafone valued at 1.6 bln usd.

Bharti Airtel and Vodafone signed an agreement on infrastructure sharing, roaming and long distance services that will enable rapid network expansion in semi-urban and rural areas.

'We are pleased to welcome Vodafone and congratulate them on their Hutch acquisition,' said Bharti chief Sunil Bharti Mittal in a statement. 'Both companies will work with the industry towards connecting millions of people across India.'

Reliance Communications said its expansion plans would not be stalled by its failure to buy the stake in Hutch Essar, saying it will invest a record 2.5 bln usd in the financial year that starts April 1.

For the Ruia family that controls Essar, a sale of its stake at the same price Vodafone offered Hutchison is expected to be a windfall amounting to an estimated 6.5 bln usd. A sale would compel Vodafone to seek another local partner because India caps foreign ownership of telecom companies at 74 pct.

'Telecommunication is a core business for Essar Group and we continue to create value in this sector both within India and globally,' Ravi Ruia, vice chairman of Essar Group, said.

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