HTIL investors approve India unit sale
Vodafone Group's HK$87b purchase of Hutchison Essar gains overwhelming support but other issues to be resolved
Shareholders of Hutchison Telecommunications International Ltd approved yesterday the HK$87 billion sale of its Indian mobile-telephone operator to British rival Vodafone Group.
'We received overwhelming support from our shareholders for this transaction,' said HTIL chief financial officer Tim Pennington.
Ninety-nine per cent of those present and voting supported the transaction, market sources said.
The deal still needs to be approved by India's Foreign Investment Promotion Board, which the company said would not happen before April 2.
Other potential issues that need to be resolved include a claim by Essar Group, which owns the remaining 33 per cent in Hutchison Essar, that it should have the right of first refusal.
There is also a petition filed by Telecom Watchdog, an independent consumer group in India, with the High Court in New Delhi on Thursday requesting the cancellation of the phone licence held by Hutchison Essar, arguing it breached foreign investment rules.
The group did not seek to stop the planned asset sale, however.
'We do not believe this groundless petition will have impact on the completion of the transaction,' said an HTIL spokeswoman.
Hutchison Essar, the fourth-biggest mobile carrier in India, was the main profit contributor for HTIL over the past few years, accounting for 45 per cent of its sales and almost half of its HK$4.8 billion in earnings before interest, tax, depreciation and amortisation in the first half of last year.
HTIL, the emerging markets telecommunications unit of Hutchison Whampoa, proposed to distribute HK$6.75 as special dividend for shareholders from the sale of its 67 per cent stake in Hutchison Essar to Vodafone last month.
'I voted for the asset sale due to the attractive special dividend payout and the prosperity of the firm,' said Mr Lee, a shareholder of HTIL who bought the shares at an average price of HK$6 each.
He added that he had no intentions to sell the shares in the near term.
Shares of HTIL fell 1.75 per cent to HK$15.70 yesterday.
After the asset disposal, HTIL management said earlier that it planned to spend as much as US$5 billion on capital expenditure in three core emerging markets - Vietnam, Indonesia and Sri Lanka.
'Its Indonesian operation is set to launch today with 700 to 800 cell sites in Java, of which about 200 sites are in Jakarta,' an analyst said, adding that the firm will spend about US$800 million to US$1 billion to build a nationwide mobile network to compete with other existing carriers.
Apart from spending the proceeds on special dividends and new investments, the company also plans to use US$1.8 billion for debt repayment, of which US$1.1 billion would be slated for reducing debt at its mobile-telephone business in Thailand.