The Hindu Business Line : Will Hutch buyer be able to retain top managers?

Will the ultimate buyer of Hutchison Essar be able to retain the company's senior executives? This is one of the issues being debated in telecom industry circles.

The high valuations that the wireless company commands today can be attributed to its fourth position in the world's fastest growing telecom market. But it is also in part due to the power of the Hutch brand.

Hutch's sophisticated ad campaigns have been consistently pitched at the high-end customer and enjoy high recall among all brand categories in the country, and not just in the telecom category, said an analyst.

A break in management continuity - many among the senior management have been with the company for a decade or more - could be rather debilitating and even diminish the brand value of the company, according to industry observers.

Since a takeover very often leads to upheaval in management, the challenge before the acquirer will be retaining a majority of the top and middle management.

It is also important in terms of sustaining operations and to some extent justifying the valuation itself, said sources close to the talks.

Unlike other pan-Indian operators who started off with a huge footprint, Hutch has never pegged the importance of subscriber numbers above average revenue per user (ARPU) and has expanded operations in a considered manner, never spreading itself too thin.

As a result, over the years it has built a premium profile for itself and enjoys higher ARPU than other Indian operators.

Also, the post-paid prepaid ratio for Hutch is much higher than that of other operators - a very attractive proposition for any buyer but also a very important feature to sustain.

Hutch-Essar Managing Director Mr Asim Ghosh and many of his senior executives have a strong multinational FMCG background, a qualification much sought after by the mobile telephony industry.

Hutch-Essar also has a comparatively strong executive retention record compared to other telecom companies in the country and this makes continuity all the more important, the sources said.

(Mr Sandip Das, earlier Deputy Managing Director at Hutch-Essar, is leaving to join Maxis Communications after 13 years with the company.)

"Of course a buyer gets the network and subscribers whether the executives remain or not," said an official with one of the contender companies. But cultural compatibility between the managements of the acquirer and acquired companies is very important, he added.

There is also such a shortage of telecom talent in the country that rival operators are only too happy to plunder one another for talent, should the slightest opportunity arise.

Many telecom companies, including Reliance Communications and Tata Teleservices, have expatriates working for them - some hired and some on deputation.

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