An HTIL official had indicated that nothing less than $22bn would be acceptable in terms of valuations for 100% of Hutchison Essar.
NEW DELHI: All eyes will be on the board meeting of Hutchison Telecom International Ltd (HTIL) on Monday (January 29). The board is expected to ratify the sale of HTIL’s 67% holding in Hutchison Essar, the fourth largest mobile operator in India. The Essar group holds the balance 33% in the company.
For HTIL’s 67% stake, potential bidders are said to willing to cough up close to $17 billion, it is learnt. However, no formal bids have been offered so far. An HTIL official had indicated recently that nothing less than $22 billion would be acceptable in terms of valuations for 100% of Hutchison Essar.
Ahead of the HTIL board meeting, the industry buzz centered on various permutations and combinations that potential bidders could look at. The frontrunner in the race, UK’s Vodafone, is believed to be keeping all options open. Vodafone CEO Arun Sarin is learnt to have told the media recently that the company is in talks with several potential Indian partners, and not just Essar and Analjit Singh.
As per Indian laws, Vodafone cannot hold more than 74% in any telecom venture in the country.
Vodafone has also indicated that if it’s unable to strike a deal with Hutchison, it would go back to Bharti, its existing partner in India. Around the end of 2005, Vodafone had picked up 9.9% in Bharti for $1.5 billion. Recently, when DNA Money asked Bharti joint managing director Akhil Gupta as to whether there was still any possibility of Vodafone increasing its holdings in Bharti, he said, “let it talk to Hutch first….”
Sarin has said that Vodafone would submit its bid for Hutchison Essar within the first two weeks of February. Many of the potential bidders, including Vodafone, Reliance Communications and Essar, have already completed the due diligence process. The Hinduja group is expected to complete its due diligence soon.
Apart from these, Egypt’s Orascom Telecom is also keen on Hutchison Essar. But the Egyptian major, which can exercise the right of first refusal (ROFR) at the level of HTIL, may like to increase its holdings in HTIL rather than pick up a stake in Hutchison Essar directly. Orascom already holds over 19% in HTIL. Orascom Telecom CEO Naguib Sawiris had told this newspaper earlier that it would take a decision on the matter depending on “how high the offers go”.
Essar too is “waiting and watching”, before it makes up its mind on buying more into Hutchison Essar, or selling its existing 33% stake.
Amidst all this, the Indian government seems to be backing the frontrunner, Vodafone, in its attempt to get a foothold in the telecom market of the country. On the sidelines of the World Economic Summit at Davos, minister of state for industry Ashwani Kumar told news agencies, “We hope that Vodafone will be able to establish its footprint in India sooner rather than later.” Recently, after his meeting with Vodafone’s Sarin in New Delhi, communications minister Dayanidhi Maran, had said, “we want good companies to come to India”.
Among others said to be keen on Hutchison Essar are Russia’s Altima from the Alfo group and Malaysia’s Maxis.
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