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Home » News » Telecom » Vodafone Joins Reliance in Race to Buy Hutch
Vodafone Joins Reliance in Race to Buy Hutch
By: IANS   |   Dec 23, 2006
The battle to buy Hutch, India's fourth largest mobile phone operator, got fiercer with Anil Ambani's Reliance Communications in talks with Malaysia's Maxis Communication for a 100 percent acquisition and global mobile giant Vodafone also throwing its hat into the ring Friday.

The Reliance move came even as Vodafone, led by its Indian-born chief executive Arun Sarin, officially entered the arena with its board endorsing the move that is being spearheaded from London. Reliance Communications is also holding negotiations with the US-based private fund, Kohlberg Kravis Robers and Co, to bid for Hutchison Essar, said officials familiar with deal negotiations.

"The offer could be in the region of $14 billion," an official said, referring to the valuation that Reliance Communications has in mind for Hutch. The Hong Kong-based Hutchison Whampoa wants to sell its 67 percent stake in its mobile telephone joint venture in which the Essar group of India owns a 33 percent stake, well informed sources said.

In London, the Vodafone board gave 52-year-old Sarin, an alumnus of the Indian Institute of Technology (IIT), Kharagpur, the mandate to negotiate the deal to buy Hutch.

"The board of Vodafone continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutch Essar," the global giant said in a statement from London.

"Such a transaction would be consistent with its stated strategy of seeking selective acquisition opportunities in developing markets," it added.

The relations between Hutchison, owned by Li Ka-shing, a leading businessman from Hong Kong, and the Ruias of the Essar group reportedly turned tense after the former entered Pakistan's telecom business with Egypt's Orascom without consulting the Indian partner, the sources said.

The board of directors of Hutch Essar - which has its operations in 16 telecom circles in India with a subscriber base of 19 million - met in Mumbai Friday but could not reach an understanding on the possible future strategy.

Interestingly, Vodafone already has a stake in another telecom company in India - Bharti Televentures - totalling 10 percent. Bharti would have to waive a non-compete clause to enable Vodafone acquire the Hutch stake, the sources said.
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This is a very clever ploy by Vodafone to just raise the valuation for Hutch so that Reliance shell out more money to buy it. We all know that Airtel & Vodafone are in bed and it could well be Airtel's request to Mr. Sareen to do this so that their rival Reliance has to pay more. Reliance is the only genuine bidder for Hutch and I seriously condemn such poor tactics by companies like Airtel & Vodafone
Mritunjay @ Dec 24, 2006
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