Original URL: http://www.theregister.co.uk/2007/02/12/vodafone_buys_essar/
Vodafone bags Hutch Essar
Splurges Indian ink
Posted in Financial News, 12th February 2007 11:00 GMT
Free whitepaper – Thermal design of Dell PowerEdge server
Vodafone announced today it had finally netted a 67 per cent controlling interest in Indian operator Hutch Essar for $11.1bn cash.
The world's biggest mobile outfit outside China won the shares in an auction, reports say (http://today.reuters.com/news/articleinvesting.aspx?type=bondsNews&storyID=2007-02-12T010200Z_01_HKG12955_RTRIDST_0_HUTCHISON-INDIA-UPDATE-6.XML), making its third largest ever deal and biggest since the $231bn Mannesman deal in 2000. During the drawn out three-way tussle for Hutchison Telecom International's two thirds stake, murmurs suggested (http://www.theregister.co.uk/2007/01/02/3_ways_for_essar/) the final total avlue put on Hutch Essar might be as high as $18bn. Vodafone topped this, nearly valuing the firm at $19bn.
Vodafone said this morning it will assume $2bn in debt, bringing its total financial burden on the acquisition to $13.1bn, though the extra debt is a drop in the ocean of the group's overall debt of around $23bn.
Vodafone also said it had signed a memorandum of understanding with Hutch Essar competitor Bharti Airtel over infrastructure sharing, which includes an option for Bharti to buy back Vodafone's 5.6 per cent stake in it for $1.6bn. If Bharti exercises the option Vodafone would maintain a separate 4.4 per cent indirect interest in its partner.
Vodafone chief executive Arun Sarin said: "This announcement is clear evidence of how we are executing our strategy of developing our presence in emerging markets."
Hutch Essar will aim for a 25 per cent share of the Indian mobile market by 2012. The emerging economic powerhouse has so far seen mobile penetration of around 13 per cent, but take-up is expected to grow to 40 per cent in the next five years. ®