Hutchinson which is in a major clean-up operation before its proposed IPO offered to buy Hindujas 5.11% stake in Hutch @ Rs2025 crores($450 Million). At the current offer price Hutch is valued at $9.0 Billion. At the end of March-2006, Hutch had a subscriber base of 90 Lakhs(9 Million) which translates to Rs45,000/subscriber, precisely the same amount which Egyptian Telecom major, Orascom paid to Huthch’s promoter, Hutchinson Whampoa group in January 2006. Hindujas valuation of Hutch is at the higher end, $12 Billion, which translates into Rs60,000/subscriber.
India’s numero uno integrated mobile service provider, Bharti Telecom enjoys a market capitalization of $17 Billion and has subscriber base more than twice that of Hutch and is also growing at a faster rate than Hutch. Also Bharti-Airtel offer Landline and Broadband services. Bharti-Airtel mobile business valuation translates to approximately Rs35,000/subscriber. Considering the valuation and growth rates Bharti-Airtel enjoy, Hindujas price tag of $12 Billion for Hutch is ridiculously high.