Active Stocks
Thu Mar 28 2024 14:49:26
  1. Tata Steel share price
  2. 155.95 2.03%
  1. HDFC Bank share price
  2. 1,455.55 1.03%
  1. ITC share price
  2. 430.95 0.69%
  1. Power Grid Corporation Of India share price
  2. 278.75 2.84%
  1. State Bank Of India share price
  2. 756.00 2.99%
Business News/ Companies / Have Vodafone, Ruias buried their differences?
BackBack

Have Vodafone, Ruias buried their differences?

Have Vodafone, Ruias buried their differences?

Premium

Vodafone Group, the world’s largest cellphone services company by revenues, has cemented its India entry with a deal with the Essar conglomerate, a one-third partner in a local cellular services firm it is buying into to expand its business in high-growth Asia, sources said.

The “partnership" will likely be announced this week by Vodafone chief executive Arun Sarin and the Ruias, the promoter business family of the Essar Group, two sources confirmed, separately. The Ruias own 33% in Hutchison Essar. The remaining two-thirds, owned by Hutchison Telecom International Ltd is being bought by Vodafone for $11.1 billion in cash.

Sources said concerns of the Ruias have been addressed by Vodafone. “Both the put option and right of first refusal have been agreed upon by both sides," one source said. According to the ‘put’ option, Essar can ask Vodafone to buy it out from the venture at a price that will be equivalent to at least the valuation at which the Newbury, England-based company will pay HTIL or more.

India, the third-largest mobile phone market behind China and the US, is the world’s fastest-growing mobile phone services market in the world, adding more than five million customers every month. The country’s over-150 million cellular users in the country is expected to more than treble in five years.

The Vodafone-HTIL deal is subject to regulatory approval, which is expected by April. On Wednesday, the Foreign Investment Promotion Board, which oversees such investments, postponed its scrutiny of Vodafone’s buyout of HTIL as not all the ministries had sent in their responses on the deal. The matter will be taken up at its meeting a week later, a board official said.

Under the deal, Essar will have its representative, Ravi Ruia, nominated to the chairman’s post at Hutchison Essar, with Vodafone’s Sarin taking the vice-chairman’s seat.

However, the British company will enjoy the management rights for the company, to be renamed Vodafone Essar, with the Essar group enjoying its “proportionate shareholding rights." Under terms worked out with Essar, the CEO of the Indian operations will report to Sarin for emerging markets Paul Donovan, PTI reported quoting unnamed sources.

The Essar deal is likely to ease Vodafone’s take-over troubles in India. It was recently made party to a lawsuit filed by an NGO, alleging that the foreign holding in the operator had gone beyond the allowed ceiling of 74%.

Vodafone had said in February it is acquiring HTIL’s direct stake of around 52% and another indirect stake of around 15% held by two individuals -- Hutchison Essar chief executive Asim Ghosh and New Delhi businessman Analjit Singh -- in Hutchison Essar, beating bids by other suitors Reliance Infocomm, the London-based Hindujas business family and the Ruias themselves.

Essar, which owns business ranging from oil exploration to telecom, and announced a $300 million investment into mobile phone retailing today, had initially insisted that it had the first right to any offer for sale by HTIL of its stake. HTIL, however, had gone ahead and sold its direct and indirect stakes to the Newbury, England-based mobile operator.

abhineet.k@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 15 Mar 2007, 12:36 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie