It’s a global play for Hutch now

NEW DELHI: Global players, led by Malaysia’s Maxis and UK’s Vodafone, are set to give stiff competition to frontrunner Reliance Communications in the race for Hutchison Essar, India’s fourth largest mobile phone operator, it is learnt.

The list of potential bidders has risen to double-digits, with Singapore’s SingTel, South Africa’s MTN, Qatar’s Qtel, Norway’s Telenor and Egypt’s Orascom now seen as showing some interest. Others being named with some degree of caution include Telstra of Australia, Deutsche Telekom, France Telecom, Telefonica and NTT DoCoMo.

Why the rush? Simple. With a total telecom subscriber base of 183.53 million, teledensity in India is just 16.6%. The mobile base in the country is 143 million, with the monthly addition varying between 5 million and 6 million. According to a recent report prepared by Ernst & Young, “India is projected to be the largest contributor to the next half-billion subscriptions globally. Over one in five additions is projected to come from India in the period from Q4, 2006, to Q4, 2007.” Turn to Page 22

A Vodafone spokesman, John Earl, when contacted by DNA Money about the possibility of a bid, said he couldn’t confirm or deny anything. “It’s a no-comment on that, I’m afraid,” he said.

Interestingly, Vodafone’s Indian partner Bharti Airtel has stayed quiet on the agreement that the two signed last year. In 2005, Vodafone picked up 10% in Bharti for $1.34 billion. While Vodafone has been keen on increasing its holdings, there’s no room yet for that. A Bharti spokesman declined to confirm or deny whether the deal with Vodafone allows the latter to buy a stake in a rival mobile company in India. “The details of the agreement cannot be shared”, he said. However, government norms would allow Vodafone to pick up a stake of upto 74% in Hutchison Essar even if it retains 10% in Bharti.

The same cannot be said for SingTel, which holds more than 30% in Bharti and hence cannot buy into another mobile company in India. When contacted, a SingTel spokesperson said, “SingTel remains committed to our investment in Bharti.”

Maxis, which holds 74% in Aircel, is a serious contender. According to an international report (The Edge Daily), “Maxis Communications Bhd has made a bid for a controlling stake in India’s Hutchison Essar, the country’s fourth largest mobile operator.” It adds that this is the second bid made by Maxis, after its initial $13.5 billion bid with Texas Pacific was rejected.

According to sources in investment banking circles, besides Vodafone and Maxis, serious international bidders may also include Qatar’s Qtel, South Africa’s MTN and perhaps Norway’s Telenor. While Australia’s Telstra is being named as a player, an industry source argued that it has too many issues of its own and may not like to look at a new market at this point. Deutsche Telekom also may not be serious as “it has not shown interest in the Indian market of late”. Other big names like France Telecom and Telefonica have not shown any active interest, it is learnt. NTT DoCoMo of Japan, though a CDMA player, had recently announced a technology joint venture with Hutch.

Orascom, on the other hand, would seek government clarity on foreign investment norms following recent concerns over security due to its operations in Pakistan.

“No significant global player can afford to ignore the second largest mobile telephony market in the world,” is how another investment banking industry source explained the rush for Hutchison Essar. “Generically speaking, the Indian telecom market is extremely attractive to global players,” another source added.