The deal for 67% of the company gives Vodafone access to India's rapidly growing mobile phone market, where Essar has a share of about 16%. Posted on 02/11/2007 4:29:14 PM PST by samsonite
Vodafone buys Indian mobile firm Indian models with mobile handsets India's mobile market is expanding rapidly Vodafone has bought a controlling stake in Indian mobile phone firm Hutchison Essar for $11.1bn (£5.7bn).
The deal for 67% of the company gives Vodafone access to India's rapidly growing mobile phone market, where Essar has a share of about 16%.
It ends a long bidding war for the Essar stake owned by Hong Kong's Hutchison Telecommunications.
UK firm Vodafone is moving into emerging economies to make up for slow growth in mature markets like Europe.
According to Vodafone, India is the fastest growing mobile market in the world, with around 6.5 million new subscribers every month.
'The world's most important mobile market'
Arun Sarin, the chief executive of Vodafone, said the announcement was "clear evidence of how we are executing our strategy of developing our presence in emerging markets".
Vodafone's chairman, Sir John Bond, said India was "destined to become one of the largest and most important mobile markets in the world," and predicted the company would be "playing [its] part in delivering the significant economic and social benefits which mobile telephony can bring to the people of India".
The deal values the Indian mobile phone firm - often referred to as Hutch - at $18.8bn, about a billion dollar less than some analysts had predicted.
Vodafone said it would also take on $2bn in net debt. The UK mobile phone operator was bidding against Anil Ambani's Reliance Communications and the Hinduja Group for the purchase of Hutch.
Essar Group, which owns the remaining 33% of the company, had reportedly tried to take full control of Hutchison Essar as well.
Vodafone said it would offer Essar Group to buy this stake "at the equivalent price per share it has agreed with [Hutchison Telecommunications International]".
Joint network with Bharti
The UK operator already had a small stake in the Indian mobile phone market, owning 5.6% of Bharti Airtel.
Vodafone has now granted an option to Bharti Group to buy this stake.
In return Vodafone's new Indian subsidiary and Bharti have signed a memorandum of understanding to share their mobile network infrastructure, while continuing to compete for customers.
Last week Vodafone signed a similar agreement in the UK, where it agreed with rival Orange to merge their 3G networks.
Vodafone currently has interests in emerging markets including Egypt, Romania and India - and underlined its ambitions for further expansion in similar markets at an investor meeting in January.
India is the fastest growing mobile market in the world, with around 6.5 million new subscribers every month.
WOW
All those big figures wouldn't be impressive if the existing players aren't making money. In India, seems like they are. Margins made on the cheapest per minute call rates anywhere in the world.
That I find impressive.
Volume, tax credits, limited regulatory burden, etc. make it a profitable operation. Interesting!
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