Interest in Essar lifts Hutchison Telecom
Frederick Yeung and Wong Ka-chun
Shares in Hutchison Telecommunications International rose 3.51 per cent yesterday before the company confirmed it had been approached by various parties interested in its 66 per cent-owned Indian mobile-phone operation.
One of the potential bidders, British-based mobile operator Vodafone Group, issued a statement confirming its interest in Hutchison's Indian operation. The board of Vodafone met on Thursday and agreed to pursue a bid of more than US$13.5 billion for Hutchison Essar.
Hutchison Telecom's shares rose 62 HK cents to HK$18.28. The company's statement was issued after the market closed.
Vodafone, which already has mobile-phone interests in India, said in a statement issued yesterday morning London time that its board 'continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutch Essar.'
The firm said such a deal would be consistent with its strategy of seeking selective acquisition opportunities in developing markets.
'The process is at an early stage and may or may not lead to a transaction,' Vodafone said.
Vodafone holds a 10 per cent stake in India's largest mobile operator, Bharti Airtel, worth #1.4 billion (HK$21.4 billion). The purchase in December last year included a one-year non-competition clause.
India's second-largest mobile operator, Reliance Communications, may also make a bid for Hutchison Essar, with markets speculating earlier this week that Reliance would partner with US-based private equity fund Blackstone Group to make an offer.
Broker Goldman Sachs yesterday said it would be surprised if Hutchison Telecom quit the Indian mobile market at this time, citing a low mobile penetration rate in India at 12 per cent and as Hutchison was becoming the nationwide mobile operator and starting to get economies of scale.
Even so, 'Hutchison Telecom management may sell the asset at the right price', Goldman said in a research report yesterday.