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Shares of Hutch Telecoms slide on report of India deal hold-up

Shares of Hutch Telecoms slide on report of India deal hold-up
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First Published: Wed, Mar 28 2007. 09 35 AM IST
Updated: Wed, Mar 28 2007. 09 35 AM IST
Reuters
Hong Kong: Shares in Hutchison Telecommunications International Ltd slid to a five-month trough on Wednesday after reports said government scrutiny could delay its planned sale of $11.1 billion (Rs47,935 crore) in Indian assets to Vodafone Plc.
By 0325 GMT, Hutchison Telecoms, which this year agreed to sell its majority stake in Hutchison Essar — India’s fourth-largest carrier — to Vodafone, had slid 5.2% to HK$14.64.
Vodafone, the world’s second-largest wireless operator, had been counting on the deal with Hutchison Telecoms — an affiliate of billionaire Li Ka-shing’s Hutchison Whampoa — to expand into a fast-growing Indian telecoms arena.
But a local business paper reported on Tuesday that India’s government was investigating the structure of the Hutchison Essar deal, to see — essentially — if it contravened caps on foreign ownership.
Vodafone’s shares climbed 0.5% on Tuesday to 140.70 pounds.
With more than 150 million mobile subscribers but a market penetration of only around 15%, India is the world’s fourth-biggest mobile market — behind China, the United States and Russia.
It is the fastest-growing major mobile market and is expected to overtake Russia this year. At its current pace of expansion, India will have half a billion mobile users by 2010.
Chief Executive Arun Sarin expects the envisioned Vodafone Essar, which will rank behind Bharti Airtel, Bharat Sanchar Nigam Ltd and Reliance Communications, to become India’s top operator in three years.
Vodafone plans to swap the Hutch brand in India with its own, accelerate capital expenditure, promote low-cost handsets and introduce new services suited to the vast country — such as money transfers over cellphones.
But the agreed sale has not been problem-free: an earlier irritant to Vodafone’s plans appeared resolved after Hutchison announced it had provisionally agreed to pay $415 million to Essar — a major shareholder in the target firm — in return for the Indian group’s cooperation in completing the deal.
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First Published: Wed, Mar 28 2007. 09 35 AM IST
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