Hutch Vodafone Takeover

Category: Vodafone
Last Updated: 24 Jun 2020
Essay type: Process
Pages: 2 Views: 95

After months of pitched battle, British mobile telecom major Vodafone Monday formally said it is buying a 67-percent stake in India's fourth largest mobile firm Hutch-Essar for $11. 1 billion and targeting a 25-percent market share in the country in five years. The London-headquartered company, that submitted a formal bid to the Hutchison Whampoa group midnight Friday, had earlier offered to pay $19 billion for the entire 100 percent-stake in Hutch-Essar. Vodafone has also agreed to take over a debt worth $2 billion.

The remaining 33 percent stake in the mobile phone company is with the Ruias of Essar. Vodafone has offered to buy that stake as well. "Vodafone announces it has agreed to acquire companies that control a 67-percent interest in Hutch Essar from Hutchison Telecom International Ltd. (HTIL) for a cash consideration of $11. 1 billion," a Vodafone statement said. For Vodafone, the acquisition will make India their third largest mobile phone market after Germany and the US with over 23 million subscribers and a 16. ercent national market share, industry sources said.

"This announcement is clear evidence of how we are executing our strategy of developing our presence in emerging markets," said the India-born chief executive of Vodafone Arun Sarin. "We have concluded this transaction within our stated investment criteria and we are confident it will prove to be an excellent investment for our shareholders. Hutch Essar is an impressive, well run company that will fit well into the Vodafone Group.

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According to industry experts, the mobile telecom giant, which has considerable expertise in third-generation (3G) mobile telephony segment, will have an edge over others once the new policy is rolled out later this in year or early 2008. Vodafone, which also had 10 percent stake in rival Bharti Airtel, said it will share the infrastructure with the company, based on a pact signed with the Sunil Bharti Mittal group.

Infrastructure sharing is expected to reduce the total cost of delivering telecom services, especially in rural areas, enabling both parties to expand network coverage more quickly and to offer more affordable services to a broader base of the Indian population," the statement said. Vodafone has also offered to offload 5. 6 percent of the said 10-percent holding to the Mittal family for $1. 6 billion. The Mittals, meanwhile, congratulated Vodafone on the deal, which is expected to make competition fiercer in the Indian telecom market.

Vodafone's remaining 4.4 percent stake will, however, be retained and the group will act as a financial investor and not have any representation on the Bharti Airtel board, nor have any management rights, the statement added. Other players who had participated in the bidding process were Anil Ambani's Reliance Communications and the London-based Hindujas, both of whom have also congratulated Vodafone for making a successful entry into India's booming telecom market. Vodafone has operations in 25 countries with over 200 million proportionate customers at end of January 2007, as well as 36 partner networks, a company statement said.

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Hutch Vodafone Takeover. (2017, Mar 30). Retrieved from https://phdessay.com/hutch-vodafone-takeover/

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