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Our Bureau

Uncertainty over role continues

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Mumbai Feb. 12 Whether the Essar group will accept UK-based Vodafone's offer to buy its 33 per cent stake in Hutch Essar Ltd or continue as its Indian partner remains as the one uncertainty in the Vodafone-Hutch deal.

The Essar group is currently not willing to commit, but said that it was evaluating their options. If it sells, it will receive around Rs 25,000 crore in cash.

The UK company on Sunday agreed to acquire companies that control a 67 per cent interest in Hutch-Essar (HEL) from Hutchison Telecom International Ltd (HTIL) for $ 11.1 billion. This includes the 52 per cent stake held by HTIL and the 15 per cent stake held jointly by Mr Analjit Singh and by Mr Asim Ghosh, currently Managing Director, HEL.

Buy-out

"Economic interests is important, because Vodafone will assume certain loans advanced to the latter individuals whose voting shares in HEL would remain," said Mr Ghosh. It is up to Vodafone to decide on his future at HEL, he said, adding "but at this point, I have no plans to move".

He said the brand name Hutch would likely continue for a "long time", till the new promoter decides what to do with it.

Vodafone will offer to buy out Essar at the equivalent price per share agreed with Hutch. If Essar decides to accept the offer, the local minority partners (Mr Singh and Mr Ghosh) between them will increase their combined interest to 26 per cent, said a statement from Vodafone.

The transaction is expected to be completed by the end of calendar year 2007, subject to regulatory approvals. Vodafone's interest in HEL will be 52 per cent following completion of the deal and it will exercise full operational control over the business, it said.

COMPETITION

While Bharti Airtel, India's largest wireless operator, has entered into an MoU with Vodafone for roaming, tower sharing and international long distance activities, Reliance Communications said it would fall back on its organic plans for growth.

"We will maintain our substantial financial strength and flexibility, while investing a record capex of Rs 11,000 crore ($ 2.5 billion) in the coming financial year," said Mr Anil Ambani, Chairman, Rcom, in a statement.

On his company's bid for Vodafone, he said, "We congratulate Vodafone and welcome them to India," said Mr Ambani.

"Reliance's bid was made in line with our publicly declared and consistent philosophy of sustainable value creation, and financial conservatism, in the face of truly challenging acquisition valuations. Our bid also took into consideration the unique benefits of in-country consolidation and the substantial synergies, which an existing player like Reliance alone enjoyed."

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