Vodafone calls on DoT for Hutch
Meanwhile, the Hindujas have become the latest entrants in the $20-billion plus battle for HEL.
By TNN |
NEW DELHI/MUMBAI: Even as Vodafone readies to launch a bid for Hutchison Essar (HEL), senior company executives met department of telecommunications (DoT) officials for clarity on foreign direct investment (FDI) regulations and procedures in India. Sources said that Vodafone’s director of external affairs, Matthew Kirk, and director of international operations, Neil Gough, also made a presentation on the company’s plans for India to telecom secretary Dinesh Mathur. Government sources confirmed that Vodafone was the only player in the race for HEL to have sounded out the government on its plans so far. However, they declined to comment on whether Vodafone had specifically discussed the Hutch Essar transaction.
Meanwhile, the Hindujas have become the latest entrants in the $20-billion plus battle for HEL. Hinduja Group vice chairman AK Das told ET that they were looking for a controlling stake in HEL and that the group was ready for an all-out bidding war with other suitors. The Hindujas’ decision to jump into the fray has evoked consternation in telecom circles, with one of the bidders maintaining that Reliance Communications, Essar and Vodafone are the only serious contestants. This bidder also disputed the $20-22 billion valuation for HEL that is now doing the rounds, and pegged it at a more conservative $16-17 billion.
Top Hinduja executives, however, sound serious. Hindujas’ group president (finance) and CFO Prabal Banerjee added that the group was in constant touch with Hutchison Whampoa over the issue, and had initiated steps towards ensuring that it had adequate funds for the bid. “We are in talks with five banks and they have indicated their willingness,” Mr Banerjee said. The stake purchase will be financed through the group’s internal resources and a combination of debt, he said, but declined to comment on what the bid amount would be. “We will be competitive vis-à-vis the rest of the bids,” he said.
Last June, the Hindujas had sold their 5.11% stake in HEL to Hutchison for $450 million (at the current valuation of $20 billion, this stake would have been in excess of $1 billion). Group executives say they had offered to buy out Hutch even then, but it had refused. “We exited because we did not want to be minority shareholders. We do not want to be financial investors. We want control and we will settle for nothing less than 51%,” said Mr Das. Following the sale, Hinduja TMT executive chairman Ashok P Hinduja had then stated that the group would consider re-entering the telecom sector in India at an appropriate time.
While Mr Das said the group had not discussed their proposed bid with the Ruias, he was confident that there would be no friction with Essar, who holds 33% in HEL, and also has the right of first refusal. “We are comfortable with Essar. We are friends and they consider us as insiders in the company,” he said. Mr Das refused to comment if Vodafone had approached the group for a partnership to be a minority stake-holder. He also declined to comment if the Hindujas had met Vodafone’s top executives who are currently in the country.
When contacted, Bharti officials also said that no meeting had taken place with the Vodafone executives, but added that the two companies were in constant touch.
Earlier in the day, sources said that Mr Kirk and Mr Gough met DoT officials for close to an hour. “While they did elaborate on the subject of the ongoing battle for HEL, they sought details on our stance on Press Note 5, which contains the guidelines on the 74% FDI cap in telecom. They also wanted to know additional details on communications and IT minister Dayanidhi Maran’s recently announced Vision statement on the future of telecom in India,” government sources said.
Meanwhile, the Hindujas have become the latest entrants in the $20-billion plus battle for HEL. Hinduja Group vice chairman AK Das told ET that they were looking for a controlling stake in HEL and that the group was ready for an all-out bidding war with other suitors. The Hindujas’ decision to jump into the fray has evoked consternation in telecom circles, with one of the bidders maintaining that Reliance Communications, Essar and Vodafone are the only serious contestants. This bidder also disputed the $20-22 billion valuation for HEL that is now doing the rounds, and pegged it at a more conservative $16-17 billion.
Top Hinduja executives, however, sound serious. Hindujas’ group president (finance) and CFO Prabal Banerjee added that the group was in constant touch with Hutchison Whampoa over the issue, and had initiated steps towards ensuring that it had adequate funds for the bid. “We are in talks with five banks and they have indicated their willingness,” Mr Banerjee said. The stake purchase will be financed through the group’s internal resources and a combination of debt, he said, but declined to comment on what the bid amount would be. “We will be competitive vis-à-vis the rest of the bids,” he said.
Last June, the Hindujas had sold their 5.11% stake in HEL to Hutchison for $450 million (at the current valuation of $20 billion, this stake would have been in excess of $1 billion). Group executives say they had offered to buy out Hutch even then, but it had refused. “We exited because we did not want to be minority shareholders. We do not want to be financial investors. We want control and we will settle for nothing less than 51%,” said Mr Das. Following the sale, Hinduja TMT executive chairman Ashok P Hinduja had then stated that the group would consider re-entering the telecom sector in India at an appropriate time.
While Mr Das said the group had not discussed their proposed bid with the Ruias, he was confident that there would be no friction with Essar, who holds 33% in HEL, and also has the right of first refusal. “We are comfortable with Essar. We are friends and they consider us as insiders in the company,” he said. Mr Das refused to comment if Vodafone had approached the group for a partnership to be a minority stake-holder. He also declined to comment if the Hindujas had met Vodafone’s top executives who are currently in the country.
When contacted, Bharti officials also said that no meeting had taken place with the Vodafone executives, but added that the two companies were in constant touch.
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Earlier in the day, sources said that Mr Kirk and Mr Gough met DoT officials for close to an hour. “While they did elaborate on the subject of the ongoing battle for HEL, they sought details on our stance on Press Note 5, which contains the guidelines on the 74% FDI cap in telecom. They also wanted to know additional details on communications and IT minister Dayanidhi Maran’s recently announced Vision statement on the future of telecom in India,” government sources said.
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