Vodafone group Plc has called for a board meeting later today [Thursday] to seek approval to bid for Hutchison Essar Ltd. Vodafone led by Sarin is seeking board approval for $13.5 Billion Plus bid. Earlier Maxis’ bid of $13.5 billion was tuned down.
Vodafone already holds 10% stake in India’s best and largest Mobile service Provider, Bharti Airtel Ltd. Had Vodafone held more than 10% stake in Bharti, it would be ineligible for Hutch Esaar because current Indian regulations restrict any entity to hold more than 10% stake in two cellular companies offering services in the same circle. However, an entity / investor with interest in Telecom company “A” can buy out Telecom company “B”, both operating in the same circle. Due to these regulations, Reliance Communications Ltd another strong contender for Hutch Essar wants 100% or none. Reliance’s GSM wing, Reliance Telecom’s operations overlap with Hutch’s operations only in two circles, Kolkatta and West Bengal and thus Anil Ambani’s desperate bid for Hutch Essar.
Stay tuned, will update more on the ir-rational valuations and Bids.
Tags: Mobile India, Telecom India, Vodafone, Reliance Telecom
This is an egomanical move by the CEO of Vodafone, who is out to prove himself. They should rather focus on thier existing 10% equity in Bharti, instead of making new moves in Hutch. The earlier investement with bharti has been a disaster and this is one more move of the CEO to fool Vodafone shareholders and create unrealistic valuation for Hutch. The financial community should realise this fact and dissuade people like Atul Sarin to make such moves