Orascom of Egypt controls upto 65% of Pakistan’s and 8% of Bangladesh’s cell phone market. It paid USD 1.3 Billion to buy 19.3% stake in HTIL – Hutchinson Telecom International Limited. HTIL is a subsidary of Hutschinson Whampoa group. HTIL operates with various Indian partners with Essar being the major Indian partner in Hutchinson Essar. With this deal, Orascom gets to indirectly hold 8% in Hutchinson Esaar which has 13 Million subscribers. Orascom will also get one board members seat on Hutchinson Essar. Orascom also has the right to increase its stake in HTIL and thus subsequently raise stake in Hutchinson Essar to 10%.
Lets take a closer look at Hutch – Orascom USD 1.3 Billion deal.
80% of HTIL’s subscribers are from Hutchinson Essar join venture. Hutschinson controls 42% of the venture while Essar Teleholdings control 33% and the balance divided between various Indian operators like Fascel, Kotak and BPL after they voluntarily merged their operations into the Hutch Essar venture.
Looking at what Maxis paid for Aircel acquistion, this deal appears to be very very expensive. Sure Hutch-Essar is a national operator, has higher growth rate and footprints in all the major circles and licenses for 6 more through the acquistion of Essar Spacetel. Orascom’s 8% stake will translate to 1.04 Million subscribers directly under its control for which it has paid Rs4,600 crores, which in-turn translates to paying Rs44,230/subscriber(USD950). Considering this deal, Maxis got a cake walk deal, presence in Tamil nadu and an entry into the world’s fastest growing telecom market.
Continued growth in GSM subscribers in India during the last quarter of 2005, has reason for one Finnish company to keep smiling – Nokia. Nokia expects its handset sales to be close to 900 million units in 2006. Continued co-operation from the government by reducing import duty on handsets from 50% in 2000 to 5% in 2005, thus eliminating the grey market and a constant push by IT Minister Mr. Dayanidhi Maran to expand services to rural areas will not only help boost the bottomline of handset manufacturers but also that of network infrastructure companies. Further concessions are available for handset manufacturers who want to setup shop in India and localize to the Indian diversity.
Nokia is the market leader in India followed by Sony-Erricson and Samsung. The trio control a whoping 85% of the GSM handset market. GSM is the most sought after service with 80% of Indian subscribers opting for it, while the remaining 20% is divided between CDMA and WLL.
C Sivsankran is an ambitious and cut-throat business man. ET reports that he is hitiing the JackPot again.(Recollect he has already built and sold DishNetDSL to Tatas after he was unsuccessful to win controlling stake in VSNL from the Government of India). He was in talks with the Hutchinson group earlier this year to sell Aircel(T.N & Chennai circles) a deal which was valued at Rs2,860 crores. (Rs14,300/subscriber) with 20 Lakh subscriber base.
Who is Buying Aircel ? Malaysian Billionaire and Telecom Barron, Ananda Krishnan’s Maxis Telecom is closing the Aircel deal @ Rs3,600 crores. Maxis has taken the right step in entering India considering future growth and synergies in the two networks.
Will C Sivsankaran step in Forbes Billionaires list now ? Hardly matters to him.