Analjit open to partnering with Vodafone

NEW DELHI: Max India chairman Analjit Singh, who owns 8.75% stake in Hutch Essar, is learnt to be open to being Vodafone’s partner if the UK-based telecom major acquires Hutchison’s stake in India’s fourth largest telecom operator. Of Hutchison Telecom International’s (HTIL) 67% stake in Hutch Essar, Hutchison holds 52%, Mr Singh holds 8.75%, and Hutchison Essar CEO Asim Ghosh and other associates hold 6.25%.

While Vodafone can acquire Hutchison’s 52% equity, it cannot directly acquire the remaining 15%. This is because Essar Global’s 22% stake, along with Hutch’s 52%, takes the foreign equity in the company to 74% — the maximum permissible FDI in a telecom company. In such a scenario, Vodafone will need an Indian partner to park up to 15% of the equity currently held by Hutch’s Indian associates. It is here that Mr Singh may have a role to play. When contacted by ET, Mr Singh declined to comment on the issue.

However, sources close to Mr Singh say that Vodafone has informally sounded him out on the issue through an intermediary, and he would be open to the option if the terms and conditions are attractive. There are many reasons why Mr Singh could prove to be a compelling choice for Vodafone. He was the founder of Hutchison Max, the original, albeit much smaller, avtaar of Hutchison Essar. He has been involved in the company over the past 10 years.

More importantly, he enjoys excellent relations with the Ruias, and has acted as an intermediary between them and their estranged partner, Hutchison, more than once. If Essar continues to hold 33%, he could play a similar role between it and Vodafone. Sources close to Mr Singh say that if the partnership does materialise, he will sell his stake along with Hutchison and then enter into a separate deal with Vodafone.

Though Mr Singh owns 8.75% in Hutch Essar, his economic interest in the company is significantly less as Hutchison had advanced a large proportion of the funds with which he had acquired his stake in the company last year.