Vodafone Eyes India Telecom Hutch Essar

Friday, December 22, 2006

LONDON —  Vodafone Group PLC, the world's largest mobile phone company, said Friday it is considering taking a controlling interest in Hutchison Essar Ltd., raising the possibility of a bidding war for the Indian mobile phone operator.

Hutchison Telecommunications International Ltd. confirmed it had been approached by a number of unnamed parties wanting to buy its 67 percent stake in Hutchison Essar, India's fourth-largest operator, but declined to give details. Indian oil and gas conglomerate Essar holds the other 33 percent.

Reports suggest that a bid would value the entire company at $13.5 billion.

"The discussions are taking place with all parties involved. It is too premature to supplement any further," Hutchison said in a statement.

Mumbai, India-based Reliance Communications, India's second largest mobile phone operator, has reportedly already expressed interest in gaining 100 percent of Hutchison Essar.

In an announcement to the London Stock Exchange, Vodafone said the process was at an early stage and may not lead to a deal.

"The board of Vodafone continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutch Essar," it said.

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Vodafone is looking to offset slowing European customer subscription rates _ it earlier this week agreed to sell its 25 percent stake in Swisscom Mobile back to Swisscom AG _ by gaining a stronger grip on India's mobile phone market, which analysts estimate is adding 6.6 million new subscribers a month.

Hutchison Essar has around 18 million customers.

The deal is also likely to be dependent on Vodafone managing to avoid a one-year non-competition clause with its current India mobile phone partner Bharti Airtel Ltd., in which it holds a 10 percent stake.

Bharti said it had been advised of Vodafone's interest in Hutchison by the British company and that it was awaiting further developments.

Vodafone shares fell 1.2 percent to 142 pence ($2.79) in afternoon trade in London.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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