Santa Clara, California: Vodafone’s top executive said on 7 July his hopes that India’s regulatory bureaucracy has modernized was shaken by last-minute moves to derail his company’s $11 billion (Rs44,000 crore) takeover of Hutchison Essar.
Arun Sarin, the chief executive of global wireless operator Vodafone Group Plc, called for greater transparency in India’s merger approval process to defeat backroom efforts by vested interests to manipulate India’s political bureaucracy.
“I really did not expect people — the “good and great” of India — to be calling cabinet secretaries, ministers, to say, ‘You have to unwind this deal, because we want a piece of it,´” Sarin told a conference of Indian business and academic leaders taking place in Silicon Valley during the weekend.
He was speaking to hundreds of fellow alumni — academics, engineers and entrepreneurs — the Indian Institutes of Technology. IIT graduates have founded many of Silicon Valley’s top companies.
Sarin, now a US citizen, is one of India’s best-known expatriate businessmen. Raised at a military boarding school in Bangalore, he graduated from the Indian Institute of Technology, then rose through the ranks of the US telecommunications industry before joining London-based Vodafone as CEO in 2003.
Vodafone edged out some powerful Indian business groups with an $11 billion bid for Hutchison Telecommunications’ majority stake in India’s fourth-biggest mobile firm in January.
It then underwent a three-month regulatory wait — rapid by US or European standards, he noted.
Sarin said he was confident the deal would sail through until the regulatory process in New Delhi entered its final weeks and he became aware of behind-the-scenes lobbying of key bureaucrats by competitors attempting “to crater the deal.”
“The billionaire losers’ club was trying to unwind the deal,” the Vodafone leader said. “What was fascinating was that there was absolutely no transparency to the process.”
“What I didn’t count on was that the bureaucracy would kick in with this kind of evil spirit from our competitors who had lost,” he said at a news conference after his speech.
Despite his criticisms of India’s regulatory environment, Sarin said he was confident throughout the government approval process that political and economic forces now at work in India would allow Vodafone’s bid for Hutchison Essar to prevail.
Before entering the bidding for Hutchison Essar, Sarin said he had spent time with Indian government leaders to gain assurance that Vodafone’s entry into India would be welcomed.
“I was completely confident from a political standpoint we would have the blessing and air cover” to get the deal done, he told reporters.
Despite the resistance, Vodafone’s bid gained approval in April. Previously known as Hutchison Essar, the Indian company has been renamed Vodafone Essar. Vodafone owns two-thirds, while Indian company Essar owns the remaining third.