The Hindu Business Line : Reliance Comm, Maxis in race for Hutch stake

Malaysian telecom major Maxis and Reliance Communications have confirmed that they are interested in picking up a stake in Hutchison Essar. This comes even as industry sources said that Hutch was ready to give up its claim for BPL's Mumbai circle, an issue, which has lead to souring of relationship between Hutchison and Essar.

While most of the circles acquired from BPL has been merged with Hutch, only the Mumbai operations have been kept by Essar because Hutch could not get necessary clearance from the Government.

Meanwhile, according to sources close to the development, Essar is also locking up funds if there is an opportunity to buy Hutchison's stake in the joint venture. Officials of both Hutch and Essar denied that there was any move to dilute equity in the joint venture company.

Mr Asim Ghosh, Managing Director of Hutchison India said on Thursday that reports of equity sale were speculative. He had also said that the price being quoted for Hutch was too low.

In case Hutch decides to sell its equity then Essar will have the first right of refusal, which will make it possible for the Ruias-promoted company to take controlling stake in Hutchison Essar. Riuas-promoted Essar owns 33 per cent stake in the mobile company.

Reliance's aim

On the other hand, Reliance Communication is understood to be putting together a corpus of $14 billion for acquiring the stake. However, Reliance's bid may hit a stumbling block with the Government rules, which does not permit common promoters in two different telecom companies in the same circle.

Industry sources said that Reliance might, therefore, pick up a stake in Hutchison Telecom International, giving it an indirect equity in Essar Hutchison.

More Stories on : Telecommunications | Mergers & Acquisitions

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