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Thomas K Thomas

To roll out services in six more circles

New Delhi March 16 Having settled the deal with its partner Essar Group, Vodafone is all set to invest $1.5 billion this year in rolling out cellular network in the country.

The company is geared up to accelerate this investment over the next few years, spending as much as 50 per cent of Vodafone Essar's revenues on capital expenditure, according to sources close to the company.

Apart from taking its network to the rural areas, Vodafone is also bringing its low cost handset in the second half of 2007.

Systematic change

While the company plans to introduce the Vodafone brand in place of Hutch, the company will undertake consumer research to ensure that the change is done in a systematic way. The company is also planning to rollout services in six new circles by the end of this year.

Vodafone had recently announced that it had acquired 52 per cent held by Hutchison Telecom International Ltd in Hutchison Essar. The acquisition can be formalised only after the Foreign Investment Promotion Board gives its approval.

Following completion of the acquisition, Vodafone will own a 42 per cent direct interest in Hutch Essar through its acquisition of 100 per cent CGP investments (Holdings) Ltd (CGPIL). Through CGPIL, Vodafone will also own 37 per cent in Telecom Investments India Private Ltd (TII), which in turn owns 20 per cent in Hutchison Essar.

Stakeholders

TII has 38 per cent in Omega Telecom Holdings Private Ltd (Omega), which in turn owns 5 per cent in Hutchison Essar.

Both TII and Omega are Indian companies. These investments put together give Vodafone a controlling interest of 52 per cent in Hutchison Essar.

The Ruias-promoted Essar will continue to have 33 per cent stake in the cellular company.

HTIL's Indian partners, Mr Asim Ghosh, Mr Analjit Singh and Infrastructure Development Finance Company Ltd, who together hold the balance 15 per cent stake in Hutchison Essar, retain their shareholdings with full control, including voting rights and dividend rights.

Vodafone will be entitled subsequently to acquire shares in TII and Omega if permitted under Indian regulatory requirements, which permits FDI only up to 74 per cent. When Vodafone is able to acquire these shares, it will own a 67 per cent interest in Hutchison Essar.

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