Sarin meets mandarins

NEW DELHI: Vodafone, the world’s largest mobile company, clearly sent out a signal on Wednesday that it is the frontrunner in the race to acquire a substantial stake in Hutch Essar, India’s fourth largest mobile phone operator — and that a formal bid is not far away.

Vodafone CEO Arun Sarin kicked off his three-day visit to India by lobbying with key government ministries ahead of the proposed bid for Hutch Essar, which is being valued up to $21 billion.

Sarin’s meetings with government representatives coincided with reports in international newspapers that private equity funds were not enthusiastic about bidding along with Vodafone due to the high valuation of Hutch Essar.

In an eventful day, as far as Hutch Essar deal is concerned, the board of directors of Reliance Communications (RCOM) also reaffirmed its interest in the “potential opportunity”. The board authorised RCOM chairman Anil Dhirubhai Ambani to take all necessary steps to bid for Hutch Essar including raising long-term resources.

The spokesperson of the Prime Minister’s Office (PMO) had on Tuesday stated that there’s no government role in a private deal, when asked whether Prime Minister
Manmohan Singh would meet Arun Sarin.

Although there was no meeting with the PM, the Vodafone honcho met finance minister P Chidambaram, commerce & industry minister Kamal Nath, and communications minister Dayanidhi Maran through Wednesday.

His current business partner Sunil Mittal, CMD of the Bharti group, too met Sarin. Currently, Vodafone holds 9.9% in Bharti.

It is an “important transaction”, and Vodafone is looking at “all aspects of this business seriously”, Sarin stressed.

Vodafone was keen on picking up whatever stake was available in Hutch Essar, he maintained. To a pointed question on whether Vodafone was ready to have Essar as the joint venture partner, he said, “we are open to all options.” Vodafone has already begun the due diligence process before formally bidding for Hutch Essar. In fact, a 15-member team of Vodafone has been in Mumbai for the past few days for the due diligence process.

As to when Vodafone would formally put a bid, Sarin replied, “in a few weeks.” On the completion of the deal, he said, “it would take several weeks”, adding that completion of the deal would depend on the “seller and not the buyer”.

Indications are that Hong Kong-based Hutchison Telecom International Ltd (HTIL), which owns 67% in Hutch Essar, wants to conclude the deal by the Chinese New Year in February. On whether, a firm decision was likely by the end of this month, Sarin said, “maybe a bit later”.

Sarin’s first meeting of the day was with his existing partner Sunil Bharti Mittal. Mittal called upon Sarin at his New Delhi hotel Wednesday morning.

Although the buzz was that the two had disengagement talks, Mittal later told reporters that, “Vodafone is serious about Hutch Essar,” but denied that there has been any talk yet on disengagement.

At this point, “there’s no question of Vodafone selling its stake in Bharti,” Mittal said. Mittal added that his other partner, SingTel, which has 30 per cent in Bharti, does not have a say in the matter. Recently, it was reported in some sections of the media that SingTel wanted the Vodafone members to step down from the Bharti board as the UK company was keen on Hutch Essar. SingTel had refused to comment on that.

From the time he landed in New Delhi in the wee hours of Wednesday, Arun Sarin handled media queries through the day on his “keen” interest in Hutch Essar.
However, after his meeting with Maran at his Electronic Niketan office, where media was barred, Sarin drove away in a black Mercedes without speaking with the reporters waiting at the gate. Sarin is expected to meet Hutch and Essar officials over the next two days.

Interestingly, Shashi Ruia of the Essar Group also had a meeting with the finance minister on Wednesday. Essar holds 33 per cent in Hutch Essar, where Hutchison Telecom International Ltd (HTIL) owns 67 per cent. The same day, Sunil Mittal is believed to have parleyed with Dayanidhi Maran as well.

Among the government leaders, Nath is believed to have told Sarin that best commercial practices must be followed in the proposed deal. Also, interest of all stakeholders must be kept in mind, Nath said. The commerce minister also said that any takeover should be transparent and FDI regulations must be kept in mind. With Maran, Sarin is learnt to have discussed the FDI regulations in the sector and the growth path in telecom. Earlier in the day, Maran had told reporters that “good companies should come to India,” while replying to a question on Vodafone’s proposed bid for Hutch Essar.