The Hindu : Business : Essar is a natural partner: Vodafone

Online edition of India's National Newspaper
Friday, Jan 12, 2007
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Business

Essar is a natural partner: Vodafone

Sandeep Dikshit

Open to partnership with another competitor Reliance

NEW DELHI: The U.K.-based Vodafone, in pursuit along with other companies of a stake in Indian cellular company Hutchison Essar Limited (HUL), described Essar [holding 33 per cent stake in HUL] as a "natural partner'' but said it was keeping its options open. Facing a possible downgrading in its credit ratings if the bid crossed a certain threshold, the company said it would not indulge in a bidding war.

Valuation

"Essar is a natural partner. It is already there in the joint venture. We are talking to several companies and will see whom we can have as partner on a long-term basis,'' Vodafone chief executive officer Arun Sarin told newspersons at the end of his two-day visit to the country.

Against the backdrop of reports suggesting that HUL could be valued up to $21 billion, Mr. Sarin said, "there is only a certain valuation to which we will go and not beyond.''

The first player to announce its intention about acquiring Hutch-Essar, Vodafone would make its bid known over the next few weeks for "all the equity'' available in the market. Mr. Sarin would visit India later to assess the situation. The takeover deal is slated to be the biggest in the telecom sector. Vodafone holds 10 per cent in Bharti Telecom, the country's largest GSM cellular operator, but is looking for a buyer.

Mr. Sarin has expressed his company's seriousness in taking a substantial stake in the company by visiting the headquarters of the Hong Kong-based Hutch, which holds 67 per cent stake in HUL and calling on Union Finance Minister P. Chidambaram and Communications and Information Technology Minister Dayanidhi Maran.

While describing Essar as a natural partner, Mr. Sarin said he was open to a partnership with another competitor, Reliance. Essar too is interested in purchasing Hutch's stake in the Indian cellular company.

Reliance Communications, meanwhile, stepped up activity with its Chairman Anil Ambani calling on Mr. Chidambaram, Mr. Maran and Communications Secretary D. S. Mathur on Thursday.

Essar Chairman Shashi Ruia had already made the rounds in the national capital on Thursday.

Though buoyant about taking a major foothold in the Indian cellular market which has been growing at a scorching pace, Mr. Sarin is under pressure with Standard & Poor downgrading the company's rating, reflecting rising debt levels and increased risk. A report from London said the company could be downgraded again if its bid went beyond $19 billion.

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