After Hutch-Essar acquistion by Voadfone, everybody is busy to digest the impact it will have on Vodafone Group Plc. I don’t know the health of Vodafone Group Plc but all I can say is it will make money from Vodafone India [Yes I would like to call it Vodafone India and no more Hutch Essar]
Arun Sarin carefully scripted the entire takeover battle taking into confidence Vodafone board, HTIL, Essar Group, Ministry of Finance, Minsitry of IT and Communications and the CEO of Hutch Essar, Asim Ghosh.
- Vodafone Group Plc board wanted growth and they’ve got it.
- HTIL’s Li wanted a fair price to exit and he is a happy man. But questions about Asim and Max’s stake in HTIL’s 67% is unanswered.
- Ruia had met Sarin in London and guess Sarin then handed the script of Ruia’s role in the takeover drama ;-).
- Indian Government is happy to have a global telecom giant in India and is more happy to make Reliance Telecom invest aggressively to expand the GSM footprint creating more jobs and small business opportunities for Indians.
- Also had Reliance won the bid, then their would be legal hurdles as in some circles, Reliance would have more than 50% marketshare. Essar and Ambani rivalry would spark again.
- Had Vodafone not won the bid, then I am skeptical if Vodafone had any plans to operate in India.
- Asim Ghosh already enjoys the confidence of Arun Sarin though both went to different schools [Asim graduated from IIT Delhi, while Sarin went to IIT Kharagpur]
On Valuation – Enterprise Valuations at $19 Billion does look expensive, and Vodafone is paying 7 years of forward revenues of Hutch [$126 ARPU / Year]. But Vodafone India will continue to grow and thus 12 months from now, the deal would look fairly valued.
FDI Hurdle -I think Vodafone India may go for an IPO to fulfill FDI regulations and don’t be surprised if Mr. Sarin obtains special permission from the Indian Government for smooth transition. Essar is planning to delist Essar Steel and Essar Oil from Indian stock exchanges and hence may sell part of their stake at current valuations.
Vodafone’s Holding in Bharti Airtel Ltd– Mr. Mittal was not comfortable SingTel raising stake in the company and hence asked Sarin for a deal. Bharti Airtel will buyback 5.6% of Vodafone’s stake at $1.6 Billion with deferred payment plan. Vodafone will continue to hold 4.4% stake in Bharti Airtel without board representation. Vodafone’s investment in Bharti Airtel has already more than doubled in 18 months.
Overall, Mr. Arun Sarin has done a fantastic job. Like a Godfather, he has given everybody a deal which they can’t refuse 😉
Tags: Mobile India, Vodafone, Arun Sarin, Telecom
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