London/Beijing: British telecom giant Vodafone has paid a discounted price of $10.9 billion (Rs 46,870 crore) in cash for Indian mobile firm Hutch-Essar to complete a deal that gives it access to one of the fastest growing mobile markets to counter saturation in European markets.
The final price represents a reduction of $180 million from the originally agreed price of $11.08 billion, which reflects retention and closing adjustments as agreed with seller Hutchison Telecom.
The adjustments include provisions for a previously announced settlement pact with Indian partner Essar.
“I am delighted that, having secured all the necessary regulatory approvals, we are now able to complete this important transaction and move onto the process of integration,” Vodafone CEO Arun Sarin said.
“The transaction was completed on May 8,” Hong Kong-based Hutchison Telecommunications International Ltd (HTIL), which sold its entire stake in the company, said in a release.
The stage is now set for Vodafone to start its operations in India, which is witnessing an addition of five million new mobile subscribers every month. Hutch-Essar will become Vodafone-Essar over a period of time.
The estimated pre-tax gain from the sale is expected to be approximately $9 billion to HTIL.
The adjustments also include $352 million retention by Vodafone toward cost and expenses associated with the transactions.
The net cash inflow to HTIL before payment of the settlement amount is about $ 10.83 billion.
HTIL is expected to declare a special dividend of 6.75 HK dollars per share following the completion of the necessary formalities.
Commenting on the transaction, Hutchison Telecom Chairman Canning Fok said: “Today marks the conclusion of an outstandingly successful venture for Hutchison Telecom.”
“We exit the Indian market as one of the best capitalised telecom companies in the region which will enable us to react swiftly to new opportunities and to accelerate growth in our existing markets,” he said.
Earlier, the deal was cleared by India’s Foreign Investment Promotion Board, which looked into allegations of breach of Foreign Direct Investment norms in the company.
India allows a maximum FDI of 74% in the telecom sector.
Vodafone acquired 52% direct stake of HTIL in Hutch-Essar, while Indian partner Essar holds 33% and three minority shareholders the remaining 15%.