The race for Hutch stake !

[abhay 0]

Reliance Communications eyes Hutch stake in Hutch Essar

Anil Ambani group's Reliance Communications is believed to be considering a joint bid with private equity firm Blackstone to acquire Hutchison Telecommunications International's 67% stake in Hutchison Essar.

According to a report by Wall Steet Journal, the deal may be valued at over $ 8 billion ( Rs 36,000 crore) excluding debt. The news report says other possible bidders include Texas Pacific Group.

A spokeswoman for Hutchison Telecommunications in Hong Kong said the company does not comment on market rumors. When contacted, a Reliance Communication spokesperson denied any such move.

A spokesperson for the Essar group said he was not aware that Hutchison's shareholding in the company was up for sale and therefore he could not comment.

The Esssr group controls 33% stake in Hutchison Essar, the third largest player in the country's rapidly growing telecom industry after Bharti Airtel and Reliance Communications. Hutchison Essar has about 20 million subscribers - more than double the number of subscribers one year ago.

A recent Morgan Stanley study puts the valuation of Hutchison Telecommunications' Indian assets at 75-80% of its total value pegged at around $11 billion.

Blackstone was considering raising a $5 billion fund focused on India

infrastructure investments, Wall Street Journal said in the report.

However, corporate observers were not sure if such a deal could happen immediately as the Essar group enjoys the first right of refusal in case Hutchison wants to pull out of India.

http://www.business-standard.com/common/st...mp;autono=18391

[linuxguy 0]

However, corporate observers were not sure if such a deal could happen immediately as the Essar group enjoys the first right of refusal in case Hutchison wants to pull out of India.

Haha...what pull out of India? This is Reliance we are talking about... They'll kick Hutchison out of India! Take over reliance take over!!! Oh please! And END OUR WOES!

Edited December 7, 2006 by linuxguy

[Honest 836]

^^^

@Linuxguy

I agree with you my dear friend. Operators like Hutch are really really looting us. Reliance has the guts to compete with them. So I too says Reliance must start GSM service as soon as possible.

Although after some time Reliance will also start looting us. But I am sure for the first 2-3 years customers will get the benefit of really low tariffs and rentals.

Regards.

[Arun 795]

Anil’s Reliance eyes Hutch

Hindustan Times

New Delhi, December 7, 2006

A majority stake in Hutchison Essar Ltd, the company that controls the Hutch brand of GSM telephony services in the country, is up for sale to global private equity firms. Anil Ambani's Reliance Communications Ltd (RCL), keen to get a foothold in GSM cellular services, may be a partner for them, a private industry source said on Thursday.

The source confirmed a report in the online edition of The Wall Street Journal that cited "people familiar with the matter", to assert that the wireless assets could be sold in a deal worth more than $8 - 12 billion (Rs 3600 - 5400 crore).

"There have been noises in the United States about the possibility of a stake being taken in the India operations of Hutch by two equity firms along with Reliance," the source, who asked not to be identified, told the Hindustan Times from Mumbai.

It is not yet clear who will be the sellers of the stakes in the joint venture led by India's Essar Group and Hong Kong billionaire Li Ka-shing's Hutchison group. In Hutchison Essar, Hutch Whampoa, Analjit Singh, Asim Ghosh and Orascom hold 67 per cent, while the Ruia promoted Essar holds 33 per cent.

The source, however, mentioned Texas Pacific Group (TPG) and Blackstone, among the heavyweights in the private equity industry hunting for big stakes in India, as likely buyers.

A Hutch spokesman in India had no comment. Blackstone officials could not be reached. A spokesman for the Anil Dhirubhai Ambani Group (ADAG) said: "We don't comment on market rumours." A spokesman for Newbridge Capital, the Indian arm of TPG, also offered no comment.

Industry analysts noted that on December 5, Sandip Das, Hutchison Essar's deputy managing director had quit to join Maxis Communications, which seemed to indicate an internal fissures in the company.

Essar was said to have raised questions over the entry of Egyptian telecom major Orascom as a stakeholder in the Indian operations.

They added that the stake sale seemed all the more probable because Reliance, which has been keen to break into GSM services to top its services based on rival CDMA technology, could be hunting to take over GSM assets, so as to rival Bharti Airtel Ltd., the country's leading GSM player.

If the deal goes through commercially, it will still have to grapple with regulatory requirements that restrict cross-holding of stakes across telecom circles, industry analysts say.

One analyst said about 60 per cent in Hutch's Indian assets could be up for sale to the consortium.

Ravi V Prasad, telecom analyst said, “Over the last few years private equity firms in India have benefited hugely from their investments in telecom and IT. There is possibility with robust telecom market they might look for a medium term investment.”

"RCL has been exploring ways to increase its foothold in telecom service using GSM. It has not been successful so far. Acquiring of Hutch makes business sense,” said Prasad.

Sri Rajan, partner, Bain and Company India, said, “The telecom sector in India particularly the wireless space has attracted a lot attention, as can be seen by the recent investments.

Blackstone ropes in Anil for $8bn Hutch-Essar bid

The Financial Express

Friday, December 08, 2006 at 0117 hours IST

The stake will give the private equity firms a de facto management control of Hutchison Essar in which the Ruia family-controlled Essar group is the second most dominant partner with a 33% stake. The balance 15% is held by Analjit Singh and Hutchison Essar managing director Asim Ghosh through Telecom Investments India.

Analysts said a Blackstone-Reliance Communications bid would face several obstacles. Reliance Communications will not be able to bid for more than 10% in Hutchison Essar since current telecom regulations prohibit a stake higher than 10% in a rival telecom operator. The combined market share of the two companies in each circle also must not exceed 66%. These regulations will keep Reliance Communications from owning a majority stake in any proposed consortium to take over HTIL’s stake. Analysts say Essar is sure to oppose any arrangement that allows Reliance a stake in its telecom venture.

A $8-billion bid for the stake will value Hutchison Essar at over $16 billion. Analysts said HTIL promoter Hutchison Whampoa had been open to selling its stake because of its differences with Indian joint venture partner Essar. The two partners have been at odds ever since Hutchison Whampoa sold a 19.3% equity in HTIL Egypt’s largest telecom operator Orascom earlier this year.

The sale gave Orascom a beneficial stake of 10% in Hutchison Essar along with two board positions. The sale did not go down well with Essar which objected to the stake sale, citing security risks. It requested the government to clarify whether a sale of stake in a company that owned an Indian firm required government approval.

The government is yet to finalise a comprehensive law to scrutinise foreign investment coming from unfriendly countries or companies inimical to the country’s security. However, the national security council is framing a comprehensive law on the matter.

Hutch-Essar operates in 16 circles and has close to 20 million subscribers. Reliance operates in all the 23 circles and has 29 million subscribers. While Hutchison Essar has applied for licences in the remaining circles, estranged relations with Essar of late have hurt its expansion plans. The differences have also delayed the proposed initial public offer of the company.

Edited December 8, 2006 by Arun

[abhay 0]

its like by hook or by crook i need to enter GSM for AA

i dont think he can actully take over reason

1) dot's rule that no one company more than 10% stake in other telecom company in the same circle

However, corporate observers were not sure if such a deal could happen immediately as the Essar group enjoys the first right of refusal in case Hutchison wants to pull out of India.

Haha...what pull out of India? This is Reliance we are talking about... They'll kick Hutchison out of India! Take over reliance take over!!! Oh please! And END OUR WOES!

linux essar had eyes on hutch's stake since a long time!! now lets c what happens next will essar take some stake or let everything go

Edited December 8, 2006 by abhay

[Arun 795]

KKR in talks with ADAG to bid for Hutch Essar

Times News Network - Wednesday, December 13, 2006

Kohlberg Kravis Roberts & Co (KKR), one of America's top private equity funds, has begun talks with the Anil Ambani group to try to form a partnership that will bid for Hutchison-Essar, India's third-largest GSM operator and the most sought-after acquisition in the telecom sector.

Investment bankers familiar with the development said that KKR, whose controversial buyout of the storied RJR Nabsico in 1988 was derided as an example of predatory capitalism at its worst, is keen to get a foothold in the world's fastest-growing telecom market by buying Hutchison's India wireless operations.

The New York-based KKR will thus join Texas Pacific Group and Blackstone, who have also been holding talks with the Anil Ambani group for a similar partnership. “It is very preliminary as of now. There are a number of unknowns in a transaction of this type,” a person familiar with the talks said. The R-ADAG group spokesperson was not available for comment.

KKR's move and the eagerness shown by both Blackstone and Texas Pacific intensify the suspense surrounding Hutchison-Essar. Hutchison Whampoa, the Hong Kong-based owner with a 67% stake, is believed to have shown an inclination to sell, but any buyer will have to contend with the Essar group, which owns the remaining 33%.

Last week, Texas Pacific along with Malaysia's Maxis made a bid for 100% of Hutchison-Essar at an enterprise value of $13.5 billion. The bidders approached Canning Fok, chairman of Hutchison Telecom International, the parent of Hutchison Essar, who was in India on a brief visit. The bid was turned down.

TPG then sought talks with the Anil Ambani group. The only unknown factor is the motive of the Essar group. The ships-to-steel conglomerate has a right of first refusal in Hutchison-Essar, which means that Hutchison Whampoa will first have to offer its stake to the group before selling it to others.

[sanket55555 0]

this story is THE biggest development in the indian telecom market.

it might completely change the dynamics of the game. i just hope that whatever develops out of this is beneficial to the indian subscribers ----thats US

[abhay 0]

Ruias eye war chest for Hutch

Egypt minister to discuss Orascom.

The race for Hutchison’s stake in Hutchison Essar Ltd, its Indian joint venture, is hotting up, with the Ruias believed to be looking at buying out their partners’ 67 per cent equity stake — in case they sell — for which they plan to approach banks.

Hutchison holds a 52 per cent stake, while another 15 per cent is held by Analjit Singh and Asim Ghosh together.

The move comes after a long list of contenders have reportedly shown interest in buying the Hutchison stake in Hutchison Essar Ltd, which include a PE fund like Blackstone, buyout funds like Texas Pacific and Kohelberg Kravis Roberts(KKR), with the Anil Ambani group, and Malaysian telecom giant Maxis.

A spokesperson for the Essar group, when contacted, declined to comment. The Ruias have the first right of refusal to buy the Hutch stake in Hutchison-Essar in case it wants to pull out.

In another development, Egyptian Foreign Minister Ahmed Aboul Gheit will be coming to India soon and may raise the issue faced by telecom giant Orascom on security, which has checked the Egyptian company’s move to play a larger role in Hutchison Essar (in which it holds equity indirectly through Hutchison Telecommunications International Ltd).

Security concerns had been raised over its presence in Pakistan and its attempt to enter the country through the backdoor.

Orascom, however, has declared that it will reduce its equity holding in HTIL — the company through which Hutchison controls its joint venture in India — though it will still have enough holding (around 12 per cent) to exercise the first right of refusal in case Hutchison decides to pull out of HTIL.

Sources close to the development said, “Hutchison has been approached by various equity funds and telcos for buyout of its equity in India. They might do so at an attractive price.” At the same time, Hutchison executives said the company had not taken any decision to sell its stake in Hutchison-Essar.

Sources said the Ruias would play a crucial role as their 33 per cent equity meant they could block by a special resolution all important decisions of the buyer of Hutchison’s stake until they had their way.

Merchant bankers close to the discussions said the Ruias were weighing the various options. A buyout of Hutchison will come with the accompanying risk of taking a large debt on their books. Informal meetings with bankers have already started to look at the funding options.

The Ruias could also rope in other partners to jointly buy out the stake, they added. Of course, the other option is to hold on to the shares — with valuations rising — as investors and sell it later.

The Ruias have also decided to run BPL Ltd, which they bought over, as a separate entity, rather than merging it with Hutchison Essar.

http://www.business-standard.com/common/st...67929&tab=r

[linuxguy 0]

Wait a sec...so ESSAR is being run by the Ruias? The Ruias own 33% stake in Hutch while Hutchison Whampoa own 67% stake, right? But the Ruias also own BPL. How is that possible? I mean BPL and Hutch belong to the same circle ( Mumbai ). How were Ruias allowed to run BPL while holding more than 10% stake in Hutch???

[HetalDP 947]

Chances of Reliance Info Buying for Hutch Stake is very Remote I think

Remember whatever the Segment reliance had enetered it was a clear Solo Venture without any Partner or Stake Holder

The case might be Reliance Refinary, Power, Telecom, Retail Reliance have not Approched any Stake Holder in its Venture

Regarding Hutch

Hutch Operate in Major 900 Mhz Chunk and Reliance had Demanded 1800 for GSM and is going for UMTS + HSDPA in 2100 for 3G

in Latest Development Newer BT come with 1800 + 2100 Mhz Dual Mode so this system can provided 1800 GSM + EDGE and 2100 WCDMA in One Installation another reason Reliance had Opted for 1800 mhz for GSM is 1800 Mhz GSM + 2100 WCDMA had alomost same Coverage (GSM 900 is Wider Coverage WCDMA 2100 is Narrower Coverage) of All 900 Mhz Operator have to Promot Much More Tower for 2100 Mhz WCDMA here is the Coverage List

Covering 9000 Square Kilometer (Theoritical Coverage Actual will be Much Higher Because of Inteference)

CDMA 450 - 1 Cell Site

CDMA 850 GSM 900 3 Cell Site

GSM 1800 12 Cell Site

WCDMA 2100 16 Cell Site

So Higher the Bandwidth lower the Coverage

Means If Reliance Opt for 1800 Mhz it will be easier for them to Align it with 2100 WCDMA Band Sites

Still ADAG if find valatuion lucrative can buyout Hutch

Hetal Patel

Edited December 14, 2006 by hpnasik

[Puneet 0]

The Ruias bought BPL with an understanding that BPL will be merged with Hutch. However, the necessary clearances didn't come in time, and they used it hold on to BPL - basically to extract more from Hutchison Whampoa. And they can still run BPL to maintain status quo, as TATAs managed to stay in Idea in spite of Tata Teleservices becoming a UASL operator.

ADAG can buy into Hutch if and only if they manage to buy 100% of the stake with an intent to merge it into Reliance Communications. Its either 10% or 100%. If they manage to buy 100% and statuary clearances do not come they will have to sell stake in one of the companies, which ESSAR will have to do with BPL eventually.

As far as operating frequency Hutch operates at GSM 1800 in most of their circles (apart from Kolkata, Gujarat, WB and UP(W)), and they operate on 900/1800 in Mumbai and Delhi. (Source: GSM World)

[abhay 0]

Wait a sec...so ESSAR is being run by the Ruias? The Ruias own 33% stake in Hutch while Hutchison Whampoa own 67% stake, right? But the Ruias also own BPL. How is that possible? I mean BPL and Hutch belong to the same circle ( Mumbai ). How were Ruias allowed to run BPL while holding more than 10% stake in Hutch???

i dont think BPL mumbai and Hutch are merged << no statuary clearances were given

The Ruias bought BPL with an understanding that BPL will be merged with Hutch. However, the necessary clearances didn't come in time, and they used it hold on to BPL - basically to extract more from Hutchison Whampoa. And they can still run BPL to maintain status quo, as TATAs managed to stay in Idea in spite of Tata Teleservices becoming a UASL operator.

ADAG can buy into Hutch if and only if they manage to buy 100% of the stake with an intent to merge it into Reliance Communications. Its either 10% or 100%. If they manage to buy 100% and statuary clearances do not come they will have to sell stake in one of the companies, which ESSAR will have to do with BPL eventually.

1) thats y tata had to leave IDEA !! because they could not hold more then 10% in both companies operating in the same circle

2) OR Anil Ambani could be thinking other way around

not merge HUTCH with RCL but just take it as a investment (ie below 10%) for Reliance Capital

[Arun 795]

Anil Ambani seems to be ready now for the GSM splash (either through the Hutch deal or own network expansion) as his US$ 1 billion loan is ready

Reliance Communications raises US$ 1 billion debt overseas

Business Standard / Mumbai December 15, 2006

Reliance Communications has raised $1 billion from international lenders, in one of the largest debt funding provided to an Indian telecommunications company.

Leading bankers including ABN Amro, Standard Chartered and Citibank are the facilitators of the five-year, unsecured loan.

The Anil Ambani-controlled company will use the proceeds for expansion of networks and facilities, apart from general corporate purposes, according to sources close to the development.

A Reliance spokesman declined to comment on the issue.

The loan comes amid speculations that the company is looking at acquiring 67 per cent stake in the GSM operator Hutch-Essar.

Reliance Communications had also earlier announced that it would raise up to $1 billion by issuing securities in overseas markets.

According to a telecom analyst, Reliance needed money for its expansion plans, even if the Hutch deals fails to go through. The company was getting "aggressive in the GSM sector in the country" and was looking for funds.

In the company's earnings call on November 11, 2006, its chairman Anil Ambani had stated that the company needed around $1.5 billion capex for the current year.

The company has invested a total of Rs 1,945.8 crore in various projects like wireless (Rs 1,499 crore), global initiatives (Rs 367 crore), broadband (Rs 270 crore) and other initiatives (Rs 528 crore) as on September 30, 2006.

Reliance was also planning strengthen its GSM presence by setting up a pan-India presence and had applied for Department of Telecommunications (DoT) for radio frequencies in the 1800 MHz band.

[abhay 0]

Blackstone, Ambani Plan $14 Billion India Telecom Bid

Blackstone Group LP and Reliance Communications Ltd. may offer at least $14 billion for Hutchison Essar Ltd., India's fourth-biggest mobile phone operator, two people with direct knowledge of the talks said.

Blackstone, manager of the world's largest buyout fund, and Reliance, India's second-ranked mobile company, may next week submit a bid to Hong Kong billionaire Li Ka-Shing, 78, and Essar Group, the people said, declining to be identified before an official announcement. UBS AG is financing the bid, they said.

The purchase would give Reliance Communications 50 million customers, an increase of 78 percent, in the world's fastest- growing mobile phone market. India's telecommunications industry is forecast to add more than 350 million users by 2010.

``If the bid is successful, then the combination between Reliance and Hutchison Essar would create the single-largest mobile operator in India in terms of subscribers,'' said Alexander Chia, associate director at Standard and Poor's in Kuala Lumpur. ``The market promises high growth rates for many years.''

Gaurav Wahi, a spokesman for Reliance Communications, Mickey Shiu, a spokeswoman in Hong Kong for Hutchison Telecommunications International Ltd., and Vikash Saraf, chief executive officer of Essar Teleholdings Ltd. in Mumbai, declined to comment. Blackstone's New York-based spokesman John Ford wasn't immediately available for comment.

Sales Plans

Hong Kong-based Hutchison Telecommunications Ltd. has been looking to sell telecommunications assets. This month, it completed the sale of its Hong Kong fixed-line business to affiliate Vanda Systems & Communications Holdings Ltd., generating HK$1.3 billion ($176 million) in one-time gains. The company has also said it plans to sell shares in its Indian unit in an initial public offering.

A sale of Hutchison Essar may lead Li's company to exit the Indian market, where it has been embroiled in a dispute with Essar Group over an attempt to buy some of the Mumbai-based company's wireless operations.

The Wall Street Journal on Dec. 7 reported that Texas Pacific Group may make an $8 billion offer for Li's stake in Hutchison Essar. Carlyle Group and Kohlberg Kravis Roberts & Co. are also in talks, the Press Trust of India reported today, without saying where it obtained the information.

`Completely Speculative'

``The sort of prices that are floating around don't make any sense, they are completely speculative,'' Hutchison Essar Managing Director Asim Ghosh said yesterday. ``I can't take such discussion seriously.''

Carlyle's Washington-based spokesman Chris Ullman was traveling and unavailable for immediate comment. Texas Pacific's New York-based spokesman Owen Blicksilver and KKR's New York- based spokeswoman Ruth Pachman declined to comment.

Blackstone and Citigroup Inc. are in separate talks with the Indian government to start a $5 billion infrastructure fund, Arvind Mayaram, joint secretary at the Ministry of Finance in New Delhi, said today.

Interest in the Indian telecommunications market is increasing, with Citigroup and Providence Equity Partners Inc. having this year bought stakes in Idea Cellular Ltd., an Indian mobile-phone operator owned by the Aditya Birla Group.

Huge Growth

Only 16.6 percent of the nation's 1 billion people have either a mobile or fixed-line phone, according to the Telecom Regulatory Authority of India said. A record 6.79 million new mobile phone users were added last month, fuelled by an economy that Credit Suisse forecasts will expand 10 percent next year, faster than China. <<< hehehe su*k that china

``There has never been a better time in the Indian telecom- industry's history,'' said Shubham Majumder, an analyst at Macquarie Securities Ltd. in Mumbai, with an ``outperform'' rating for Bharti Airtel shares. ``The market is on the cusp of huge growth over the next two to three years.''

Reliance Communications shares have risen 52 percent since listing in March, while larger rival Bharti Airtel Ltd. has increased 53 percent, outperforming the benchmark Sensitive Index's 27 percent advance.

``Earnings growth in the telecom sector comes from two things: new subscribers and new services,'' Cyrus Mewawalla, head of telecommunications research at Westhall Capital Ltd. in London, said in an e-mail to Bloomberg. ``Indian mobile operators like Hutchison Essar have both.''

Hutchison Telecom's 67 percent stake in the Indian venture includes 12.3 percent held on its behalf by Hutchison Essar Managing Director Asim Ghosh and Analjit Singh, chairman of health-care company and insurer Max India Ltd

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[linuxguy 0]

This is NAIL BITING entertaintment! When will the mystery be revealed!

[Honest 836]

^^^

@linuxguy

Wait my dear friend wait. Very soon you will get the booty.

Regards.

[abhay 0]

This is NAIL BITING entertaintment! When will the mystery be revealed!

hehe this could be ur answer

Hutch deal may involve 100% buyout next week

Reliance Communications’ formal offer, in association with private equity firms Blackstone and Texas Pacific, to buy out the promoter holdings in mobile operator Hutchison Essar could come as early as next week.

Since both partners in Hutchison Essar - Hongkong magnate Li Ka-Shing’s Hutchison Telecommunications International and the Ruias of Essar - have the right to first refusal in case one of them wants to sell, the dealmakers are working on a package that will involve buying both of them out simultaneously. While the 67% Hutchison holdings could cost $ 9 billion, buying the Ruias’ sub-33% stake will cost another $4.5 billion, taking the total deal size to around $ 13.5-14 billion.

That’s the main reason why Ambani is roping in the big private equity firms. Blackstone India chief Akhil Gupta is close to the Reliance group, and has been Mukesh Ambani’s friend.

Reliance Communications officials refused to comment on any possibility. Sources in Hutchison Essar, too, declined comment, saying that Li Ka-Shing was committed to the Indian market, but a source close to the development admitted that Hutchison was “considering proposals, and there is never smoke without fire.” He added: “Once the two parties agree on a deal, “deal-sheets can be done within hours.”

What is already known is that the Anil Ambani flagship has mandated UBS to act as advisors to the deal, with ABN Amro, Citibank and Standard Chartered Bank acting as its consortium of bankers. This consortium has already extended a five-year debt facility of $ 1 billion. Sources said that Reliance Communications is looking to raise further credit lines of $3-4 billion to fund the equity stake purchase in Hutchison Essar.

Merchant bankers said that it could take months for a successful bid to go through, but there’s no denying the high stakes involved. The purchase of Hutchison Essar will give Anil Ambani an additional 17% market share in the Indian mobile telephony market.

Hutch is ranked fourth after Bharti Airtel, Reliance Communications and state-run Bharat Sanchar Nigam. Reliance Communications plus Hutch would be numero uno by far, with a subscriber base of over 45 million.

Sources in the telecom industry say that Sunil Mittal of Bharti cannot be ruled out as a potential rival to the Anil Ambani bid. Nor can Malaysia’s Maxis, which holds 74% of another telecom operator Aircel.

A Bloomberg report, quoting “two people with direct knowledge of the transaction”, adds that Blackstone Group LP, manager of the world’s biggest buyout fund, and Reliance Communications may offer about $14 billion to buy Hutchison Essar Ltd.

The addition of subscribers at more than double last year’s pace has boosted values of telecommunication operations in India, with shares of Reliance Communications and Bharti Airtel Ltd outperforming the Bombay Stock Exchange Sensex.

“There has never been a better time in the Indian telecom industry’s history,’’ said Shubham Majumder, an analyst at Macquarie Securities in Mumbai. He rates Bharti Airtel as a potential outperformer on the market. “The market is on the cusp of huge growth over the next two to three years.’’ Shares of Reliance Communications rose 4.3% to a record in Mumbai, valuing the company at $21 billion.

Ada Yeung, Hong Kong-based spokeswoman for Hutchison Telecommunications International Ltd., declined to comment. Vikash Saraf, chief executive officer of Essar Teleholdings Ltd in Mumbai, also declined to comment.

Hutchison Essar, which began operations in 1994 with a cellular licence for India’s commercial hub of Mumbai, ended November with 22.3 million subscribers. The company’s one million new users last month gave it a market share of almost 16%. It currently operates in 16 of India’s 23 designated telecommunication zones.

The big prize

Anil Ambani with Blackstone and Texas Pacific may be the frontrunner

Sunil Mittal and Malaysia’s Maxis could also be among the bidders

If Ambani gets it, he will be numero uno by far in Indian telephony

http://www.dnaindia.com/report.asp?NewsID=1069536

[vmsanghrajka 0]

I guess, its other way round.. reliance will keep low-end customers to CDMA and want their high-end customers to shift to GSM wit 3G.. coz of GSM biased frequency allocation..

Lets c.. its quite interesting

Anil eyes 100% of Hutch Essar

MUMBAI: The battle for Hutch Essar just got more fierce. Sources close to the Anil Ambani-promoted Reliance Communication (R-Comm) said that by next week, the company "will go all out" to acquire a 100% stake in India's third largest private cellular operator. Merchant banking sources said R-Comm had tied up funds for the acquisition.

Hutch Essar is valued at $13 billion. "Money is not an issue for R-Comm," banking sources said. "If this deal goes through, it will be the largest of its kind in India and one of the largest telecom deals in the world. It will make R-Comm the largest telecom company in the country," they added.

R-Comm's attempt to acquire Hutch Essar is being backed by a consortium of four private equity investors comprising Blackstone, Texas Pacific Group, Kohlberg Kravis Robert (KKR) and Carlyle.

On Thursday, R-Comm concluded raising $1 billion in unsecured loans, the largest effort of this kind ever by an Indian telecom company so far. It was aided by Citibank, Standard Chartered and ABN Amro. R-Comm officials declined to comment.

Even as the funding falls into place, UBS, the financial services firm representing R-Comm, has opened a dialogue with Morgan Stanley, the firm that represents the Ruias of Essar. UBS' mandate is to convince the Ruias to sell the 33% stake they own in Hutch Essar. The remaining 67% in the joint venture (JV) is held by the Hong Kong-based Hutchison Whampoa and a clutch of other investors, including Egyptian telecom company Orascom.

Investment bankers said Hutch may not be averse to getting out of India."These are good valuations," they added. "But," they added,"convincing the Ruias will be difficult." They pointed out that the Ruias are also in the market to raise the funds they need to acquire the remaining 67%. Having said that, he added that the Ruias hadn't indicated that they would "not sell their stake". The Ruias were not available for comment.

Regulatory norms mandate that if any domestic telecom firm intends to buy another player in the same circle, it will have to cap its attempt at 10% or buy the entire 100%, which is why any Indian company now interested in Hutch Essar will have to acquire all of it. Buying out Hutchison's stake or that of the Ruias alone isn't allowed by law.

In another development, Najib Sawiris, who heads Orascom, will meet MEA officials in New Delhi on Saturday. He will be accompanied by Egyptian foreign minister Ahmed Aboul Gheit. Both of them are expected to initiate a dialogue with Indian officials on the security concerns they have regarding Orascom's indirect holding in Hutch Essar.

These concerns were raised by Indian officials earlier this year because Orascom also has interests in the telecom business in Pakistan. The company is seen as a potential candidate with the muscle to take a stab at acquiring Hutch Essar.

http://timesofindia.indiatimes.com/Anil_Am...show/822149.cms

[linuxguy 0]

wow...i hope they dont sell hutch to reliance! Ambani will just raise the costs to recover his investment!

[KumaarShah 143]

@linuxguy,

you can relax that Hutch will not go to Reliance....

See the following: -

Reliance Comm, Maxis in race for Hutch stake

Our Bureau

Hutch may give up claim on BPL's Mumbai circle

New Delhi , Dec. 15

Malaysian telecom major Maxis and Reliance Communications have confirmed that they are interested in picking up a stake in Hutchison Essar. This comes even as industry sources said that Hutch was ready to give up its claim for BPL's Mumbai circle, an issue, which has lead to souring of relationship between Hutchison and Essar.

While most of the circles acquired from BPL has been merged with Hutch, only the Mumbai operations have been kept by Essar because Hutch could not get necessary clearance from the Government.

Meanwhile, according to sources close to the development, Essar is also locking up funds if there is an opportunity to buy Hutchison's stake in the joint venture. Officials of both Hutch and Essar denied that there was any move to dilute equity in the joint venture company.

Mr Asim Ghosh, Managing Director of Hutchison India said on Thursday that reports of equity sale were speculative. He had also said that the price being quoted for Hutch was too low.

In case Hutch decides to sell its equity then Essar will have the first right of refusal, which will make it possible for the Ruias-promoted company to take controlling stake in Hutchison Essar. Riuas-promoted Essar owns 33 per cent stake in the mobile company.

Reliance's aim

On the other hand, Reliance Communication is understood to be putting together a corpus of $14 billion for acquiring the stake. However, Reliance's bid may hit a stumbling block with the Government rules, which does not permit common promoters in two different telecom companies in the same circle.

Industry sources said that Reliance might, therefore, pick up a stake in Hutchison Telecom International, giving it an indirect equity in Essar Hutchison.

Link Courtesy: http://www.thehindubusinessline.com/2006/1...21606560100.htm

I am not sure if anyone has posted the above here or elsewhere. In case it has been done, mods may please remove this.

Thanks

[KumaarShah 143]

RCL-led group leads the race for HEL

RASHMI PRATAP & JOJI THOMAS PHILIP

TIMES NEWS NETWORK[ SATURDAY, DECEMBER 16, 2006 12:45:51 AM]

MUMBAI/NEW DELHI:: A Consortium led by Reliance Communications (Rel Comm) is believed to have emerged as the front-runner for buying out Hutchison Essar (HEL) at an estimated value of $13-14 billion.

The consortium also includes private equity giants Blackstone and Kohlberg Kravis Roberts (KKR), sources close to the development told ET. “The deal is likely to be sealed in the next few days,” said sources.

There is also a third front emerging, with Malaysia’s Maxis, Hutchison’s JV partner Essar and Egyptian telecom giant Orascom in the fray. Amitabh Jhunjhunwala, vice-chairman of Reliance Capital, is in Hong Kong and is believed to have held discussions with Hutchison officials.

Asim Ghosh, managing director, Hutchison Essar, said he would not comment on speculation. The Essar group is also interested in buying Hutch’s stake and has been scouting for partners. JM Morgan Stanley is advising the group on its options. The group is also talking to Citibank for raising the necessary funds. Maxis, Malaysia’s telecom company, is being advised by Standard Chartered.

Meanwhile, Bharti Airtel on Friday said that it would not make the first move for buying out stake in Hutch Essar. Speaking on the sidelines of a seminar in the Capital on Thursday, Bharti CMD Sunil Mittal had said the company would consider getting involved only if either the Ruias or Hutch approached them. At present, neither party has done so. A Bharti source added it would be interested in any deal where it saw synergies.

Anil Ambani has been looking at aggressive expansion in GSM, the technology used by 70% of India’s mobile population. Hutch will give CDMA major Rel Comm a ready GSM presence in 16 circles with a robust customer base of over 22 million, most of whom are high-end users and corporate customers.

Interestingly, Rel Comm’s GSM arm, Reliance Telecom, offers services in eight circles, of which it overlaps with HEL in only one circle - West Bengal. HEL is not present in Madhya Pradesh, North-East, Himachal Pradesh, Bihar, Orissa, Assam and Jammu & Kashmir.

Reliance Telecom is offering services in all these circles except in Jammu & Kashmir. Clearly, HEL fits well in Rel Comm’s GSM gameplan.

After the joint bid by Malaysia’s Maxis and Texas Pacific Group was rejected by Hutchison Whampoa, the Malaysian telco has submitted a new bid. This time, it has gone alone and is open to exiting Aircel Cellular, where it owns 74%, if it gets HEL.

Maxis officials were in talks with Canning Fok this week. “The new bid has been submitted. It will be considered at meetings in Hong Kong spread over Monday and Tuesday. A clearer picture is likely to emerge by Tuesday evening,” a source close to the development told ET.

Sources said Maxis was not averse to selling its stake in Aircel to avoid any regulatory hurdles. Maxis bought Aircel in a deal valued at $1.08 billion last year. Its total investment in Aircel is still under $1.5 billion. “Maxis wouldn’t mind incurring a small loss if it gets a bigger and larger player like HEL,” sources said.

Maxis officials, however, refused to comment. Aircel, which has over 4 million subscribers and offers services in nine circles, has applied for licences for the other 14 circles. It has also paid $300 million as entry fee to the Department of Telecom.

Hutchison’s JV partners, the Ruias of the Essar Group, will also submit their bid for buying the country’s third largest GSM operator, Hutchison Essar, next week. According to sources, Essar is in talks with Qatar’s Q-Tel to sell 10% of its 33% stake in HEL and bring in a strategic investor. The group is also raising resources to bid for Hutchison’s 67% stake in HEL.

For the Ruias, HEL is a strategic fit in its telecom ambition, spanning telecom towers and telecom retail businesses. The group has raised its stake in HEL from 20% to the current 33%. It clearly will not let go the goose that lays golden egg. Also, the group is planning an overseas listing of its businesses under a holding company, Essar Overseas, and a strong presence in telecom will improve its brand and visibility.

In response to an e-mail, an Essar spokesperson said, “As a policy, we would not like to comment on market rumours and speculative issues.”

Last year, the Egyptian telco bought 19% stake in Hutchison Telecommunications International (HTIL), the emerging markets unit of Hutchison Whampoa and Essar’s JV partner.

There is also a buzz that Orascom is looking at a possible bid. However, this could not be confirmed. Orascom’s CEO, N Sawiris is currently in the country as part of a delegation led by Egyptian foreign minister Ahmed Aboul Gheit.

Mr Gheit and Mr Sawiris are scheduled to meet Union external affairs minister Pranab Mukherjee at 11 am on Saturday. The secutity implications of Orascom’s involvement in India are likely to come up for discussion.

Link: - RCL led group leads race for HEL

[abhay 0]

Hutch bid: Anil seeks blessings

ADAG Chairman Anil Ambani is all set to acquire India's third largest private mobile player Hutch-Essar. On Saturday, Anil visited Tirupati for the blessings from Lord Balaji accompanied by mother Kokilaben.

ADAG company, Reliance Communication, is believed to have tied up with four US equity funds, including Blackstone, to acquire the company and the firm is competing with Egyptian giant ORASCOM and Malaysia's Maxis.

The company has mandated UBS as its advisor for raising debt and resources.

According to sources Reliance Communication (RCL) may raise an additional $4-5 billion from the market for the bid.

RCL is interested to retain up to 80 per cent in Hutch-Essar, which it is seeking to acquire along with four global private equity players.

ORASCOM has already said that it would be interested in bidding for mobile service provider Hutch-Essar provided the company was welcome in the country.

ORASCOM Telecom CEO Naguib Sawires said, “I am already an indirect investor so the answer is definitely yes. I just need to be welcome. I do not want to be somewhere where I am not welcome."

The firm indirectly controls 10 per cent in Hutch-Essar after it acquired 19 per cent stake in Hong Kong-based Hutchison Telecom International Ltd.

http://www.ibnlive.com/news/hutch-bid-now-...gs/28690-7.html

[linuxguy 0]

****! i hope he doesnt spoil Hutch! Its the best amongst the worst! You Airtel people must be happy now

[abhay 0]

Hutch-Reliance deal can alter market dynamics

The Big Three of mobile telephony will then control 75-80% of the market

The last few days have seen the stock of Reliance Communications (RCom) gain a good 15.7% on the bourses as compared to a mere 6.7% rise in Bharti Airtel’s share price.

The main reason is RCom’s anticipated bid for Hutchison Essar (HE), which its Hong Kong-based promoter Hutchison Telecommunications International (HTI; 66.99% holding) is believed to have put on the block. The Ruias of Essar are the other promoters.

Although RCom is not the only potential candidate (Maxis of Malaysia and even the Bhartis of Airtel could be in the race), the street is trying to stay a step ahead.

Equity analysts are already trying to figure out who will gain from this deal and by how much. And, how it will alter the stakes for various players in the telecom space. The answers though are not simple, and could mean different things for different players.

For instance, a takeover would mean a lot for Reliance Communications, the second largest mobile player (largely CDMA-based services). RCom is seeking to expand its presence in GSM-based technology in a big way and has reportedly earmarked an investment of over Rs 30,000 crore. This acquisition would help RCom achieve near market leadership in one step - something that could have taken the company three or more years to do the organic way. A Hutch deal offers RCom a ‘big’ and ‘profitable’ presence in the fast growing GSM space. It would also enhance its total wireless market share to over 35%, or 50% higher than Bharti’s share of 23.7%. Although the acquisition route would cost more than the organic route, the market feels it makes sense, unless the valuations cross the limits of prudence.

Importantly, unlike the case with CDMA, for most GSM-based players, including Hutchison Essar, the average revenues per user (ARPUs) are higher at over Rs 400-450 per month. Says an analyst: “Hutch also has premium clients, which is one key reason for higher ARPUs.” Adds Deepak Jasani, head of retail research, HDFC Securities: “In the case of RCom, lower ARPUs are the main reason for lower valuations as compared to Bharti. And if this acquisition happens, then the gap in valuation between the two could narrow down.”

Currently, RCom trades at a discount to Bharti. To put it in numbers, Bharti’s enterprise value works out to Rs 121,550 crore, whereas, even after the recent run-up, it’s about Rs 100,000 crore for RCom. An analyst said: “Technology and profitability are two key reasons for the gap in valuations.” In profitability, while margins are largely comparable, higher revenues have resulted in higher profits for Bharti (Rs 933.8 crore as against Rs 702 crore for RCom for the second quarter ended September, 2006). Secondly, in the case of CDMA, the payment of royalties to Qualcomm and the high cost of handsets have acted as deterrents. No wonder, RCom is keen to expand its GSM operations in a big way.

The acquisition will give the buyer - Bharti or RCom - higher clout in business and scope to extract operational synergies, both of which should lead to improved profitability. For example, companies can avoid duplication with regard to advertising, staffing, sharing of infrastructure and would also be better placed while negotiating with distributors, vendors, etc.

Lastly, for RCom, if it fails to buy Hutchison, it would obviously have to put in substantial efforts and money to increase its GSM share, which could also lead to a blood bath in the telecom space-not a good sign for any player.

On the other hand, it may not be as interesting a deal for Bharti Airtel (GSM-based services), which is the leader in the mobile space with a market share of 23.7% and growing at a fast clip. Marketmen also say that the Bharti group has a lot on its plate viz., investments to be made into retail, agriculture, insurance, etc and hence, may not be as keen as other players to buy Hutchison Essar.

Whenever the deal happens, it could trigger a consolidation in the telecom space and may not be as good for the customer. Says Jasani: “Consolidation is always welcome in any industry. But, how it will impact the consumers in the immediate term is not clear. The total mobile subscriber base is over 14 crore and there is still a lot of ground to be covered for players. However, one or two more consolidation moves could improve the pricing power of mobile service providers, which may not necessarily be good for consumers. Otherwise, three years down the line, when the growth rate declines, players could look at increasing mobile charges to push revenue growth.”

It effectively means higher profits for the larger players, if they manage to gobble up Hutchison Essar. Also, although the Tatas and Idea (Aditya Birla group) are growing fast, the top three players, including Bharti, RCom and BSNL, will end up controlling anywhere between 75-80% of the market, which is unlikely to be good for consumers.

Anil seeks divine help

Anil Ambani’s Reliance Communications may be among the top hopefuls for Hutchison Essar, but there’s no reason why God cannot be roped in along with private equity to give the bid a leg up.

On Sunday, Ambani dashed off to the Tirupati temple along with his mother Kokilaben to seek the blessings of Lord Balaji. He didn’t tell waiting newsmen anything. The speculation was on whether he had come for the Lord’s blessings or thank him for being reckoned as a frontrunner. The Reliance bid has already been sent to the right quarters with Hutch reported to have appointed Goldman Sachs as the merchant banker for the deal.

BPL lowers Hutch margins

The fourth largest player in India, Hutichson Essar reported a 50.9% rise in revenues to HK$ 7.085 billion (1 HK $ = Rs 5.7) and a 46.7% rise in earnings before interest, depreciation, tax and amortisation (Ebidta) to HK$ 2.316 billion for the six months ended June, 2006.

The fall in profitability can be attributed to the merger of relatively lower-profitable BPL (three telecom circles; revenues of HK$ 570 million and Ebidta of HK$ 82 million) with Hutchison Essar in January, 2006. Excluding BPL, its Ebidta margins moved up to 34.3% as compared to 32.4% for June, 2005.

In short, on an annualised basis, it works out to over Rs 8,000 crore in revenues and over Rs 2,600 crore in Ebidta.

These numbers will only rise as Hutchison Essar recently received permission to start services in six new circles, which would enhance its presence to 22 Indian states.

http://www.dnaindia.com/report.asp?NewsID=1069790

[KumaarShah 143]

Inside the shadow war over Hutchison Essar

TIMES NEWS NETWORK[ MONDAY, DECEMBER 18, 2006 10:57:57 AM]

MUMBAI: In business, it’s said, there are no permanent friends and no permanent enemies, only permanent interests. For those who might recall the much-discussed-but-never-confirmed rivalry between the Ambanis and the Ruias (of Essar ) back in the 1990s, there’s a certain irony to the unfolding drama over the acquisition of Hutch Essar.

Hutch Essar’s 67% owner, Hutchison of Hong Kong, has made it known that it is prepared to receive an offer, knowledgeable sources have told TOI. You also know that Anil Ambani’s Reliance Communications is interested in buying Hutch Essar. But, here’s the catch: As reported in this paper last Friday and Saturday, it isn’t enough for Hutchison to agree to Ambani’s offer to buy its 67% even though it would give him majority control of Hutch Essar. Under law, it’s all or almost nothing: he has to stay below 10% — which is neither here nor there — or he has to buy out the entire 100%.

This is where the Ruias come in (or get out, depending on one’s point of view). Unless they agree to sell their 33% and exit Hutch Essar, Anil Ambani cannot enter. Ambani, therefore , must convince the Ruias to sell him their part of the business. Right now, everyone’s talking to everyone or at least planning to — even as the list of would-be suitors grows by the day, from Maxis of Malaysia to Orascom of Egypt to Qatar Telecom to UK’s Vodafone , besides Reliance Comm and who knows, Sunil Mittal’s Bharti Airtel.

The Ruias are in the unique position where they’re being sought after for their stake even as they seek to buy out Hutchison’s holdings and acquire full control of Hutch Essar . Which of the two options would they like to exercise? Truth is, they would probably like nothing better than status quo. The Ruias have had their share of problems with Hutchison and the strongwilled Hutch Essar CEO Asim Ghosh, but they also recognise that Ghosh and his team have built enormous value for them: 33% of an enterprise value of $15bn (give or take a billion) tots up to almost Rs 15,000 crore. The best part is that they haven’t had to seriously sweat for it, since the day-to-day management of the company has been Ghosh & Co’s headache. At a time when the Indian telecom market is the fastest growing in the world — faster than even China — and pre-tax profits for the top three or four telcos are said to be in the region of 40%, why would they want to rock this cruiseliner when its on high sea?

But Hutchison is said to have indicated to investment bankers that it would not be averse to an offer it cannot refuse. People in the know say the company’s multi-multi-billionaire owner Li Kashing is unsentimental about everything except his family and his dog (in a manner of speaking, since we don’t know if he has one). If someone’s willing to pay him a silly price, he’ll sell like any hard-headed businessman would, said a person close to the situation.

If Hutchison were to exit, Ruias would have a headstart on the rest of the field. Unlike all the other potential suitors, who would need to convince both Hutch and Essar to sell, the Ruias need to buy out only the Hutchison stake, either on their own or in conjunction with a partner/partners (please see page 1 report). And money isn’t likely to be a problem . Their core businesses — steel, shipping, oil — have been doing well and indications are that bankers would be more than happy to lend.

The question that the Ruias might ponder is: Would it be wiser to trade possible future uncertainty for a here-andnow mega windfall? Or, given the fact that the telecom markets are growing at such a scorching pace, should they hold out for an even better valuation in the future?

Essar’s top bosses have in the past at least publicly professed to have little interest in running their joint venture with Hutch, given that the present management was doing such a decent job. It’s too early to say if the management team will stay on if Hutch exits . From various accounts, Shashi Ruia and Ghosh share a certain bond based on mutual respect and fondness; but it’s Ravi Ruia who’s been the pointman for Essar on Hutch and it’s not known whether there’s happy co-existence on that front. There have been unconfirmed stories in the past that Ravi believes that their 33% stake in Hutch Essar entitles them to a greater say in management. But, like we said, these are just stories. For the record, both brothers have had only good things to say about their partner and the management team.

All that people on the Ruia side of the fence would say is, ‘‘We are doing our best.’’ Their benign, almost laid-back response to questions about their intent and strategy belies the fact that in relatively short time they have lined up possible partners, investment bankers and private equity firms to represent their interests and support their bid.

That doesn’t mean Anil Ambani isn’t going to give it his best shot. He’s rustled up some of the most powerful names in the global investment banking/private equity business to do his bidding and his funding. And, as reported by us on Saturday, he is preparing to launch an all-out bid for Hutch Essar.

For him, it makes eminent sense to acquire Hutch Essar. Reliance Communications has a subscriber base of about 24 million, second only to Bharti Airtel’s 30 million and a shade larger than Hutch Essar’s 22 million. With nos 2 and 3 bunched so close to each other and no 1 not that far ahead, Reliance’s acquisition of Hutch Essar would propel him to a position of unchallenged dominance, giving him 50 million subscribers (including a large international roaming population) and a valuation of about $35 billion.

It’s Reliance’s gameplan that has been the subject of some discussion . Why has it chosen to show its hand so early in the game, especially since it could artificially drive up Hutch Essar’s valuation and make the acquisition even more expensive? According to a person close to Hutch Essar, ‘‘ Serious players don’t talk, they pay.’’ Yet, no one would deny that Reliance has everything it takes to be a dead serious player. Anil Ambani and his mother on Sunday made a trip to Tirupati to seek divine assistance for his takeover bid. It might be a cold Christmas in the West, but things are just beginning to get warm here.

While Ambani has chosen to show his hand, there’s another potentially serious player who’s playing his cards very close to his chest: Sunil Mittal of Bharti Airtel. Reliance’s acquisition of Hutch Essar would have serious implications for him, not least because it would leave him a distant no 2 in the game. Is he talking to Vodafone and Singtel?

May be it’s time to call in the game theorists.

Link: http://economictimes.indiatimes.com/articl...792,curpg-1.cms

Now, what will happen? Will Reliance or Essar or Aircel-Maxis or Airtel win over Hutch? It will be very interesting.

Edited December 18, 2006 by khs123