Vodafone weighs up Indian acquisition

To buy or not to buy?

Posted in Mobile, 21st December 2006 12:47 GMT

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The Vodafone board is to consider launching a $13bn bid for Hutchison Essar, India's fourth largest mobile operator, at a meeting next week, the Financial Times reports.

With growth in Europe waning, a greater investment in developing markets makes sense. And India is developing rapidly. October saw 6.7 million new subscibers sign up, bringing the total to 136 million country-wide.

Vodafone already has a 10 per cent stake in Indian operator Bharti Airtel, but would certainly be required to sell that if its purchase went ahead. Foreign ownership rules would also limit Vodafone from owning more than 74 per cent of the company, so it'll need to find a local partner for the remaining share.

Any such bid would almost certainly be contested by Reliance, the second biggest operator, who has said it is monitoring developments while it considers making a formal bid. There may also be other contenders.

Should the Vodafone board decide against making such an offer, it could signal a strategy shift as India is a market no communications company can afford to ignore. ®

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