The race for Hutch stake !

[kepal 1]

The major advantage of RIM-HUTCH deal which all RIM & Hutch user will be expecting as under : :confused:

A) On-net free between RIM-HUTCH.

Roaming cost will reduce.

C) RIM CDMA user will get option to trasfer existing number in GSM.

If you know any other possible advantage please flash here , jab tak deal final ho jaye hum Khayali Pulav se to pet bhar ley ....

[vmsanghrajka 0]

Hutch buy to jingle all the way for RCL

RASHMI PRATAP

TIMES NEWS NETWORK [ UESDAY, DECEMBER 19, 2006 02:29:30 AM]

MUMBAI: There are enough operational synergies between Reliance Communications (RCL) and Hutchison Essar (HEL), and the department of telecom’s merger guidelines also seem to favour this entity, an ET study shows. RCL has applied for licences to be a pan-India GSM player.

If it is able to buy Hutch, it will get an instant entry into 16 circles where Hutch operates and where it doesn’t offer services. This will help it cut down on the time needed to enter the market.

As per the guidelines, the combined entity can’t hold more than 15 MHz of spectrum in Metro and A category circles and 12.4 MHz spectrum in B & C circles. RCL faces the spectrum regulatory issues only in two circles.

RCL’s GSM arm, Reliance Telecom, offers services in eight circles, of which it overlaps with HEL in West Bengal and Kolkata. HEL is not present in RCL’s other GSM circles — MP, North-East, HP, Bihar, Orissa and Assam.

The scenario will be different if another Indian player like Bharti Airtel enters the fray for Hutch. There are no indications that the New Delhi-based player is planning such a move. Bharti Airtel chairman Sunil Mittal has refuted talk that his company may bid for Hutchison Essar.

The DoT guidelines also stipulate that if an existing player (like Bharti or RCL) buys another operator in the same circle, it will have to limit ownership at 10% or buy the entire 100%. So, if Essar decides not to sell its stake despite a very good offer, then there’s nothing that the two can do.

Also, the market share of the combined entity should not exceed 67% in any circle. However, this will not be the case in any of the 23 circles for RCL.

http://economictimes.indiatimes.com/Hutch_...show/843594.cms

Ambani pitches for Ruia`s Hutch stake

BS Reporter / New Delhi December 19, 2006

Reliance Comm wants all of Hutch Essar at one go.

The Reliance-Anil Dhirubhai Ambani group (R-ADAG) has approached the Ruias through merchant bankers to buy their 33 per cent stake in Hutchison Essar Ltd.

Nimesh Kampani of JM Morgan Stanley, who represents the Ruias, is believed to have had meetings with R-ADAG Chairman Anil Ambani on the issue.

Merchant banking source s said the Ruias were veering to the view of cashing out but a final decision would be taken only after the valuation was decided. Both Reliance and the Ruias refused to comment on the issue. A Hutchison spokesperson from Hong Kong said they did not comment on speculation.

Sources said Ambani had approached Morgan Stanley and Hutchison’s adviser Goldman Sachs with a clear direction that he would pick up 100 per cent stake in the company and was not interested in negotiating separately with the Ruias later.

“If the deal happens, it has to be 100 per cent and the Ruias and Hutchison both have to be out. There is no question of having negotiations later on with the Ruias after buying Hutchison,” said a source.

At an enterprise value of $12-14 billion, the Ruias’ 33 per cent stake is already worth an attractive $4-5 billion. Sources said the Mittals of Bharti had also informally sounded out the Ruias, though Sunil Mittal said nothing was happening at the moment.

Hutchison’s advisers are believed to have also sounded out the Tatas but they declined to enter the race.

Sources close to the Ruias said the group had been averse to taking too much debt on its books to buy out its partner’s 67 per cent stake, which could cost around $8 billion, especially at a time when the company had restructured and cleaned up its large steel and oil debts.

“With valuations at a peak in the telecommunications business, it is a windfall for the Ruias,” said an analyst closely watching the deal. However, they have been approached by some bankers and telecom companies in case they are interested in bidding for the Hutchison stake.

Ambani is expected to close in on a deal in the next few days at an enterprise value of $12-14 billion. His adviser UBS has already roped in buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt, Ambani has enough resources to strike the deal.

However he may face competition from Malaysian telecommunications company Maxis, which may also put in an offer.

Edited December 18, 2006 by vmsanghrajka

[Arun 795]

Anil's 'altitude sickness' strategy

19 Dec, 2006 - Times News Network

On Sunday, we carried an analysis headlined “The shadow war over Hutch Essar” in which we wrote: "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 when it could artificially drive up Hutch Essar's valuation and make the acquisition even more expensive?"

We ended our analysis by saying, "Maybe its time to call in the game theorists." We weren't being flippant. The undeclared, largely subterranean war for Hutch Essar has everything a game theorist would want to keep himself occupied for a good several hours. For starters, why indeed has Anil Ambani's Reliance Communication chosen to show its hand so early? We asked a few people close to the situation.

Reliance, it appears, is trying to create an atmosphere where its competitors develop "altitude sickness", to use the words of a top investment banker who's in the loop. "When the bid price is at sea level, there'll be lots of takers. As you move up, the less serious bidders will drop out. By declaring its interest, Reliance is seeking to drive the price up to an altitude that's beyond the tolerance range of competing bidders."

But isn't Reliance cutting its nose to spite its face? Such a high price would go against its own interest, right? Well, apparently not. Anil Ambani, say people close to him, is not unhappy with the status quo where Hutchison (of Hong Kong) continues to hold 67% and the Ruias of Essar the remaining 33%.

Reliance Comm has a subscriber base of roughly 24 million and it's growing nicely. It has Airtel on one side at 30 million and Hutch Essar on the other at 22 million. No one's really unhappy, because everyone's growing.

Reliance's interest in Hutch Essar, we have reliably learnt, was triggered by reports of tension between Hutchison and the Ruias. The turning point came when the joint venture partners went into arbitration over BPL Mobile on the advice of the Bombay high court.

According to a person in the know, "There were stories on the grapevine that Hutchison might be willing to exit if the price was right. Reliance wanted to signal its interest to Hutch before anyone else could stake a claim and maybe even strike a deal. If Hutch decides not to sell to anyone, then Reliance doesn't have a problem. But obviously, its interests could be affected if a competitor gets Hutch Essar."

But surely it could've had done so discreetly, without the world media getting wind of it? Who let the dog out, and why? Our source has a theory:"Anil Ambani wanted to make sure that everyone on the Hutchison Whampoa board, particularly its independent directors, knew of Reliance's interest. So if Hutch were to be approached by some other group, the directors would at least ask,'have you spoken to Reliance as well?' A deal wouldn't just go through without considering all offers on the table."

Ambani appears to have succeeded in putting the heat not only on Hutchison, but on investment bankers and private equity firms as well. Banking sources say the Texas Pacific Group was in the process of being lined up by Maxis of Malaysia for its bid for Hutch Essar, but once Anil Ambani's interest became public, it decided to go with him.

We asked a top official in Reliance Comm if Ambani or any of his lieutenants had spoken with the Hutchison bosses in Hong Kong. He said no, it was too early, the bankers were doing the talking at this stage.

What about Essar? Had Ambani spoken to the Ruias about his interest in buying them out, which he will have to since telecom laws require that he either buy less than 10% or the whole 100%, nothing in between. It seems there's been no communication on that front either. Said a source, "The Ruias have to first decide whether they want to sell or not. It's no use talking till then."

Right now, the Ruias hold the key to all possible deals. Even if Hutchison is willing to sell its 67%, but the Ruias don't want to sell their 33%, then its a no-deal as far as Reliance or any of its competitors is concerned. What Reliance has managed to do is set the cat among the pigeons.

[h1ghlander 9]

Bharti Airtel can face legal hurdles in Hutch deal

Source: IRIS NEWS DIGEST (19 December 2006)

Regulatory restrictions can make it difficult for companies such as Bharti Airtel in case they want to bid for Hutchison`s stake in Hutchison Essar, as they will have to then surrender scarce spectrum, reports Business Standard.

Analysts said as per the merger guidelines, the merged entity could not hold more than 15 MHz of spectrum in metro and A category circles, and 12.4 MHz spectrum in B and C circles, after aggregation of spectrum held by individual merging entities.

If Bharti and Hutch were to merge, the new entity would have to surrender spectrum in eight circles as the aggregated spectrum crosses the limits set up as per the department of telecommunications (DoT) guidelines, according to analysts.

Regulatory experts said the 15 MHZ rules were likely to change as they were not based on logic. One of them said that the rules were made when each individual operator used to get 10 Mhz. However, now that limit has been upped to 15 MHz, these rules will have to change.

The merger of Reliance with Hutch, however does not violate laws on market dominance. The rules on mergers and acquisitions in the telecom sector clearly state that the new entity cannot have more than 67% market share in each circle (CDMA and GSM combined). Secondly, there should be a minimum of three operators in each circle and finally, prior approvals from DoT should be taken.

At the moment, if the merger happens, the Reliance Hutch combine will have over 50% market share only in three circles.

The other two rules which operators have to take into consideration are that an operator cannot take more than 10% equity stake in a competing company in the same circle, and even after acquisition, the Indian partner must have at least 10% stake in the company.

The shares of Bharti Airtel are trading down Rs 9.95 or 1.61% at Rs 607. The volume of shares traded at BSE is 89,113 (1.47 p.m Tuesday).

link: http://www.myiris.com/newsCentre/newsPopup...;secID=livenews

[linuxguy 0]

awesome! I hope Hutchison doesn't sell to any stupid people. We want either Reliance taking over or no one! Airtel will ruin it while anybody else ( read: Orascom ) is a threat to security!

[vmsanghrajka 0]

Reliance Comm offers merger with Aircel

Proposal is to soften Malaysia’s Maxis to join Reliance bid for Hutch Essar

Rishi Raj

New Delhi, Dec 19 Anil Ambani led Reliance Communications is believed to have proposed a merger between Reliance Communications and Aircel Limited to win over Malaysia’s Maxis in joining the Reliance-led consortium in its bid for Hutchison Telecommunications International’s (HTIL) 52% stake in Hutchison Essar. Maxis, which has launched a separate bid for the HTIL stake, owns 74% equity in Aircel which has 4.2 million subscribers in 9 circles in India.

Industry sources said Maxis has been approached by Reliance Communications to join its consortium to place a joint bid for the entire 100% stake in Hutch-Essar. Maxis would be offered shares in Reliance Communications in the proportion of funds it brings in.

Though there’s no official confirmation from either side, industry sources said that Maxis would gain from the deal as it would immediately reach out to all the 23 circles in the country, which otherwise it plans to reach by 2009.

At present, Aircel operates in nine circles, including Tamil Nadu, Chennai, Jammu and Kashmir and north-eastern states. It is shortly starting services in Himachal Pradesh and Bihar. The company has applied for licences in Mumbai, Maharashtra, Karnataka, Rajasthan, Delhi, Gujarat and Andhra.

Hunting Season

• Sources said Maxis would gain from the deal as it would immediately reach out to all the 23 circles in the country

• Maxis, which has launched a separate bid for the HTIL stake, owns 74% equity in Aircel Ltd

Industry sources said that Maxis has emerged as the only operator which could pose a challenge to Reliance in acquiring 100% stake in the country’s fourth largest telecom operator. Reliance has already roped in private equity firms like Blackstone Group, Texas Pacific Group, KKR and Carlyle to place its bid, while Standard Chartered has been appointed by Maxis.

As reported earlier by FE, Reliance is also negotiating with Hutchison Telecommunication International Ltd (HTIL) owner Li Ka-Shing of providing stake in Reliance Communications provided the deal is sealed in its favour. It is also understood to have offered to retain the present managing director of Hutch-Essar, Asim Ghosh in the same capacity. Reliance has opened negotiations with Maxis because if Ruias of Essar, who hold 33% stake in Hutch-Essar, are unable to buy out HTIL’s stake, Maxis would be its main challenger. The other contender, Orascom may face security-related concerns since it already operates in Pakistan and Bangladesh.

URL: http://www.financialexpress.com/fe_full_st...ntent_id=149373

[abhay 0]

Vodafone may join race for India's Hutchison Essar; sell Bharti stake - reprt

Vodafone Group PLC is planning to join the race to acquire Hutchsion Essar Ltd, the Indian mobile phone services joint venture of Hong Kong's Hutchison Telecommunications International Ltd, the Economic Times reported, without citing sources.

It said the UK-based firm is in discussions with bankers and advisors on the strategy to be adopted.

Previous media reports said that India's Reliance Communications and Malaysia's Maxis Communications are also in the fray along with many private-equity firms.

The Economic Times reported that Vodafone is also exploring options of selling its stake in the Bharti group and that Vodafone's banker UBS has been asked to explore options for the sale.

Vodafone purchased 10 pct in the Bharti group last year in deal worth more than 60 bln rupees. About 5 pct was bought in Bharti Enterprises, the holding company, while the rest was a direct stake in the listed Bharti Airtel, then called Bharti Tele-Ventures.

A sale of the 10 pct holding now is likely to fetch Vodafone over 160 bln rupees, the paper said.

A Vodafone spokesperson declined to comment, it said.

http://www.hemscott.com/news/latest-news/i...=38287486151627

Maxis puts Aircel Cellular rebranding on hold

Maxis Communications, Malaysia’s largest telecom operator, has postponed rebranding of Aircel Cellular (in which it has 74% stake) to Maxis.

This is because it is in the race to buy Hutchison Essar (HEL) and feels that if it wins the bid for the No 3 Indian telco, it could merge it with Aircel Cellular for a combined rebranding exercise.

Aircel’s name will be changed only after Hutch promoters declare the name of its acquirer. As ET had reported, Maxis Communications had put in a fresh bid for Hutchison International’s (HTIL) 67% stake in HEL last week after its earlier bid (jointly with Texas Pacific Group) was rejected. Maxis has gone alone for its second bid.

Sources said that Maxis officials had initiated talks with Hutchison Whampoa’s group MD Canning Fok last week and the talks are still on due to the new bid. Standard Chartered is advising Maxis Communications. HEL has 22.3 million subscribers (November 2006 figures) and a market share of 22.1% in the GSM space.

Aircel has 4.2 million customers and 4.2% market share. A successful buy-out of HEL will catapult the Maxis-Aircel combine to the third slot in India, behind Bharti Airtel and Reliance Communications. Maxis has always maintained that the company was looking at a larger footprint in the world’s fastest growing cellular market.

Last year, it had bought 74% in Aircel Cellular for $1.08 billion. Recently, Maxis, paid $300 million to the Indian government as entry fee for 14 circles and for national and international long distance licences for Aircel Cellular. Reliance Communications, however, continues to be the front-runner for acquiring HEL. Maxis has put in its bid despite speculation that R-ADAG would close the deal on December 28 (Dhirubhai Ambani's birthday) for an estimated $12-14 billion.

The R-ADAG group, which is being advised by UBS, has reportedly tied-up with private equity players like Black-stone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, to finance the buy-out. Anil Ambani has been looking at an aggressive expansion in GSM, the technology used by 70% of India’s mobile population.

HEL will give Reliance Communications 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. Macquarie Securities India, in its research note on Monday put the enterprise value of HEL at $ 13.7 billion and an equity value of $12.8 billion.

http://economictimes.indiatimes.com/News/N...show/855667.cms

this story is getting complicated day by day!! every1 wants to merge with each other

Edited December 20, 2006 by abhay

[KumaarShah 143]

This merging business has become the flavour of the season. It is getting murkier and murkier day by day.

Any way lets all wish that RCL eventually gets to take over Hutch. Anyone else including Maxis, Airtel, Vodafone etc would not be welcome.

I think the position would become clearer within a week or earlier also. RCL is trying its best to secure Hutch and announce it on Dhirubhai's birth anniversary 28 th December, according to newspaper reports.

Anyway let us all enjoyyyyyyyyyyyy the unfolding drama as it happens.

[petar 15]

Anil Might prove to be a winner in the race.

His closeness to Nimesh Kampani of JM Morgan Stanley - who is appointed by Ruias to negotiate thier side of deal is prime reason that he might convince Ruias to sell him the 33%. The Ruias stake is the only hassle Anil has in way for complete 100% takeover. Rest assured that when ambanis (wether anil or mukesh) are in mood to get a business, damm they care abt the price. Anyway, the more the price he pays for the company... more the consumer shall suffer.

[linuxguy 0]

wow...this is getting more and more exciting lets see what happens next!! I dont want Hutch to be sold to anyone else other than reliance

[Arun 795]

well, Reliance seems to be loosing the hold now...

Maxis readies bid for Hutch Essar

Business Standard

New Delhi - December 21, 2006

After Vodafone, more competition for Anil Ambani.

Posing serious competition to the Anil Dhirubhai Ambani group, Maxis of Malaysia is finalising a bid for Hutchison Essar, the third largest private mobile operator in India.

The Maxis bid has the option of buying Hutchison’s 49 per cent stake in Hutchison Telecommunications International Ltd (Orascom owns another 19 per cent and the remaining stock is widely held) or directly acquiring HTIL’s 67 per cent stake (with its associates) in Hutchison Essar. Maxis representatives have declined to comment.

After the Anil Dhirubhai Ambani Group and European telecom major Vodafone, Maxis is the third serious suitor for Hutchison Essar. An acquisition will give the successful bidder a strong footprint in India, the world’s fastest growing mobile market.

Maxis already has a presence in India after it bought Aircel, which operates mobile services in Tamil Nadu and Chennai, apart from five other circles, and is now looking for a pan-India launch.

Meanwhile, the Vodafone stock today moved up by 1.04 per cent on the bourses after news broke that it might join the race for Hutchison Essar. Vodafone is likely to call a board meeting soon to discuss the matter. Ravi Ruia of the Essar group is also learnt to be camping in London.

While Vodafone said it would not comment on speculation, sources in the know said it was interested in picking up only the HTIL stake in Hutchison Essar, and would want to operate the company with the Ruias.

They also disclosed that Vodafone had had months of discussion with Sunil Mittal of Bharti Airtel, in which it had a 10 per cent equity stake, for making a joint bid for Hutchison Essar and perhaps later merging the two entities.

However, the talks were believed to have failed on account of regulatory issues and the possibility of the Mittal equity falling very low in case of a merger. As a result, merchant bankers said, Vodafone had decided to go it alone.

If the deal fructifies, Vodafone sources said, the company could sell its stake in Bharti Airtel, given that it would have a larger stake in another mobile operator in the country.

On his part, Mittal denied that there was any move by the two companies to jointly buy into Hutchison Essar. He said he was unaware of Vodafone’s plan for Hutchison, adding that Bharti was not interested in any bid.

[linuxguy 0]

Lets see...Anil was trying to woo Maxis. Lets hope they dont come too much in the way nahi toh we will eliminate them

[petar 15]

RELIANCE-HUTCH JOINT ENTITY is win-win for consumers & owners.

Imagine the wide base of customers one can call in ON NET PACK & FREE SMS IN ON NET PACK.

It could make seamless roaming in CDMA & GSM, Just like China unicom.

Possibilities are endless... but hey..so is speculation. SO keep speculating.

[linuxguy 0]

petar no yaar...with a subscriber base of ~50million, Ambani will be untouchable!! It would be BAD for the consumers because he would try to improve the ARPU of Reliance! Airtel will have a HARD TIME catching up with Reliance! So basically Reliance will stop caring for the customer so they will increase costs left, right and center!

[abhay 0]

its not good for over all telecom industry of India

1) telecom industry in india started booming after many players entered << in this case they are consolidating amongst them selfs

2) although foreign funds are ready to come in but internally this is a weak point

this is like going reverse

Arun Sarin vs. Anil Ambani: Hutch set for a global battle

The board of British telecommunications giant Vodafone, headed by Indian-born Arun Sarin, will meet on Friday to finally approve a proposal to acquire India's fourth largest mobile phone service company, Hutchison- Essar, at a valuation of around $15 billion.

While that happens, Anil Ambani is stitching up private equity and debt to build a war chest for a bidding war to aid his Reliance Communications, investment banking sources say.

In case the board approves the proposal, an intense price war is expected to start early next week as Reliance Communications is waiting for Vodafone to take the first move, investment banking sources told Hindustan Times.

"The stage is set for a replica of Corus deal where Tata Steel and Brazilian Steel manufacturer -- CSN are locked in a counter bidding exercise," a source close to the deal said.

However, much depends upon the Ruias, who control Essar's 33 per cent stake in the joint venture with HongKong's Hutchison group.

As of now, they have not decided whether to divest or retain their holdings in the company, which on current reckoning could bring them a neat Rs. 23,000 crore in cash.

Investment banking sources said that Shashi Ruia wanted to exist from the telecom business, which is currently enjoying its peak valuations and invest the funds in other sunrise sectors such as power, where the Essar group is aggressively looking to increase its exposure. But his younger brother Ravi feels that the valuation would increase further in the coming days as the Indian telecom sector is growing at a faster pace.

The sources said that the Vodafone management may find it difficult to justify its case in the board for investment of a whopping $10 billion to buy 67 per cent in Hutchison-Essar and yet not having absolute control, if the Ruias do not sell their stakes. Under current Indian laws, Vodafone can acquire a maximum of 74 per cent but will not have its own nominee as the chief executive or as head of technology or finance.

Sources said that Reliance Communication's chief Anil Ambani, who has already tied up with lenders such as UBS and private equity firms such as Blackstone, Kohlberg Kravis Roberts & Co (KKR), The Carlyle Group and Texas Pacific Group to mobilise the resources to fund the transaction, is in discussions with the Ruias through a leading investment banker.

In case the Vodafone board decides to throw its hat into the ring, it may have to exit from Hutch's rival mobile phone service operator Bharti Airtel, in which it effectively owns 10 per cent which is currently valued at Rs 11,530 crore, at two levels.

It acquired 5.62 per cent directly in Bharti Airtel, which is the listed entity and it also holds a stake in the holding company Bharti Enterprises, which gives it effective control of 4.38 percent in Bharti Airtel. Vodafone had invested about Rs. 6,700 crore in July, 2005 and has nearly doubled its investment.

Meanwhile, in order to create a war chest of around $15 billion, Ambani may divest stakes in Reliance Communications, investment banking sources said. As per the existing regulations, the same entity cannot hold more than 10 per cent in two competing operators in a circle.

The sources said that Reliance Communications might issue upto 60 crore fresh equity shares to private equity firms. Even after that, the promoter's stake in the company will remain above 51 per cent. At current market prices, the issue can fetch around Rs 28,000 crore. The placement would fetch in the vicinity of $ 8 to 9 billion, the sources said. Besides this, the company may raise debt of $7to $8 billion, they added.

Currently, the market cap of Hutchison Telecommunications International Ltd (HTIL), which controls 67 per cent stakes in Hutchison Essar is valued at $11.4 billion.

Man Financial Securities, an international securities firm, says 85 per cent of the value of HTIL comes from its holding in Hutchison Essar. At this price, the value of the 67 per cent it holds is $9.7 billion. Based on this assumption, the equity valuation of Hutchison Essar as a whole would be $14.4 billion.

http://www.hindustantimes.com/news/181_1875834,0002.htm

Edited December 21, 2006 by abhay

[Arun 795]

Anil Ambani, Maxis may tie up for Hutch Essar

DNAindia.com

Thursday, December 21, 2006 21:48 IST

Anil Dhirubhai Ambani Group (ADAG) flagship, Reliance Communications, is likely to team up with Maxis Communications, Malaysia, to make a $14 billion offer for a 100% buyout of Hutchison Essar.

It is believed that the top brass of Reliance Communications is burning midnight oil to come out with a winning offer on December 28 — the birthday of Dhirubhai Ambani.

On another side of the Hutch spectrum, Vodafone UK’s board is slated to meet soon to fix a $13.5 billion offer for Hutch Essar, in what can then turn into a battle of telecom titans.

Maxis had earlier put in a $13.6 billion bid for a 67% equity of Hutchison Essar, held by Hutchison Telecommunications International Limited (HTIL), along with private equity fund, Texas Pacific Group (TGP). This was rejected by HTIL.

For Maxis, teaming up with Reliance Communications is expected to add muscle to its second attempt. Sources close to the deal said that Reliance Communication may offer Maxis a stake in Hutchison Essar, in proportion to the funds that the Malaysian telecom operator brings to the table.

Reliance will be backed by the Blackstone Group, manager of the world’s largest buyout fund. Maxis will bring along Texas Pacific Group.

Industry insiders reckoned that Reliance can raise anything around $7 billion by parking Hutch Essar holding with private equity investors, while the balance will be put up by a consortium of investment bankers like Citibank, HSBC, ABN Amro and UBS.

Such a financing through a mix of equity issuance to deal partners and debt would result in a net debt/EBITDA of a comfortable 2.6 times.

Maxis, which holds a 74% equity in Aircel Cellular, may agree to merge Aircel with Reliance Communications, in lieu of a stake in a much larger Hutchison Essar.

Sources said that a buyout of Hutch Essar by Vodafone could be done as it does not fall within the regulatory constraints of existing operators and the UK operator was flush with funds, having exited several smaller markets. The company, which has a 10% stake in Bharti Airtel, had been keen to increase exposure in the latter but was turned down and the current interest in Hutch Essar was logical to increase presence in one of the fastest growing emerging markets. But Vodafone, too, would hit a stumbling block towards a potential bid — finding an Indian partner. It could either be current promoter, Ruias of Essar.

Reliance Communications is yet to receive regulatory approvals and spectrum to provide GSM on a pan-India basis, and if the Hutch Essar deal goes through, the latter will be present in all the circles where Reliance is not.

[abhay 0]

Private equity firms see RCL as better bet

Some private equity giants believe that a Reliance Communications-Hutch-Essar combine will offer greater synergies and are willing to back the Anil Ambani company, while some others are even toying with the idea of an independent bid, an industry insider said.

Firms such as Carlyle and Blackstone believe that an RCL takeover of Hutch will be beneficial to the Indian company as it will help it cut costs and improve valuations. It could also result in a quicker payback of the amount invested. For Vodafone, there are no immediate visible synergies as the British company has no operations here.

Private equity players such as Carlyle, Blackstone, Kohlberg Kravis Roberts & Co and Texas Pacific Group (TPG) have been holding talks with all the prospective bidders such as RCL and Maxis on a possible collaboration in the bid. No formal consortiums have been formed as yet and the private equity players are watching the situation to see who would emerge as the stronger candidate or the likely winner.

So far, RCL seemed to be ahead, but Vodafone’s possible entry has changed the picture. With its massive cash hoard (it is estimated to have a free cash flow of 4.7-5.2 billion pounds this year), the British company may well carry the day.

But an official in a private equity firm involved in the talks had a different view. “So what if they have cash? The Indian company has more synergies. In this game, cash is not the problem,” he added.

His reasoning is that RCL with its strong financials and the backing of some private equity funds and banks would be able to match Vodafone up to a reasonable point. If two private equity funds join with RCL with a few billion dollars of equity each RCL’s position would substantially improve.

Having said that, the private equity players have not yet fully made up their minds on joining any consortium. They are waiting and watching to see who will emerge the winner. In any case, Vodafone does not need private equity money. RCL and Maxis are the ones likely to need it. The gameplan by these companies is to make a bid and once they win Hutch-Essar, they would farm out some stakes to private equity firms. The money is not needed now. Only commitments that the money can be raised are necessary.

An official in another private equity firm said that some of the firms are also mulling the possibility of making an independent bid. KKR and TPG are believed to be forming a consortium of their own, but this could not be independently verified.

Globally, private equity is known to team up with one another to make large leveraged buyouts (LBOs). But in the case of Hutch-Essar that is bound to be difficult. For one, the firms will need an Indian partner. Being foreign entities, they can only hold up to 74%. Finding an Indian partner with the ability to fork out a large sum for a minority stake is going to be difficult.

Secondly, it may prove difficult for foreign funds to manage the Indian regulatory and government environment on their own. The official admitted that the funds would need local support - a local operator who can liaison with the regulator and the Department of Telecommunications and navigate the minefield of rules and regulations.

http://economictimes.indiatimes.com/articleshow/889004.cms

Vodafone board debates Hutch bid

After an inconclusive meeting on Thursday, the Vodafone board will meet again on Friday or after Christmas to decide on bidding for Hutchison Essar, the 67:33 joint venture between Hutchison Telecommunications International Ltd (HTIL) and the Ruias.

While discussing the merits of the proposed bid, merchant banking sources said, Vodafone board members could not agree on how to deal with the Ruias -- whether they should hold their stake or another partner should be brought in that bought them out of the venture. Vodafone is reportedly looking at a $13.5 billion bid. A Vodafone spokesperson declined to comment.

Meanwhile, agency reports said Hutchison Whampoa had received bid interest in its Indian mobile business, but that the prices indicated so far were too low.

"There have been some expressions of interest," a source close to the development told Reuters. The source declined to name the suitors but said Hutchison was unlikely to agree to a bid of about $13.5 billion.

Vodafone shares fell by over 2.2 per cent in afternoon trade at the London stock exchange after it was reported that the company's board would meet today to take stock of the situation.

As for the Anil Dhirubhai Ambani Group, sources in the know said it had decided to bid only after Vodafone put an offer on the table.

In a week of hectic developments, Essar honcho Ravi Ruia met the Vodafone brass in London on Tuesday, according to top merchant banking sources. The UK company was given to understand that the Ruias were open to the Vodafone proposal in case it was able to pick up HTIL's 67 per cent stake in Hutchison Essar.

The Ruias also made it clear that they were in no hurry to exit from the venture and would take a decision only after the contenders put their bids on the table. Ruia, the sources added, was accompanied at the meetings by Vikas Saraf, who handles the group's telecom investments.

Vodafone's final decision to join the race would be crucial as it was seen by merchant bankers as a strong contender for Hutchison Essar. Sources close to the group said it had hinted that it would be ready to up its offer based on an enterprise value of $15-17 billion.

The third bidder in the battle is Maxis of Malaysia, which has already had discussions with the Ruias. However, merchant bankers said, it might not match the financial clout of Vodafone or the Anil Dhirubhai Ambani Group.

Vodafone has been selling its equity stakes in Europe (it sold off 25 per cent in Swisscom just a few days ago) and the US to focus on Asian, African and East European markets. It has a 10 per cent stake in Bharti Airtel, which it bought for over $1.6 billion in 2005.

http://inhome.rediff.com/money/2006/dec/22hutch.htm

Edited December 21, 2006 by abhay

[Arun 795]

bit conflicting from the earlier report, but sounds more "official"

Ambani pitches for Ruia's Hutch stake

Business Standard

December 19, 2006 03:37 IST

The Reliance-Anil Dhirubhai Ambani Group has approached the Ruias through merchant bankers to buy their 33 per cent stake in Hutchison Essar Ltd.

Nimesh Kampani of JM Morgan Stanley, who represents the Ruias, is believed to have had meetings with R-ADAG Chairman Anil Ambani on the issue.

Merchant banking source s said the Ruias were veering to the view of cashing out but a final decision would be taken only after the valuation was decided. Both Reliance and the Ruias refused to comment on the issue. A Hutchison spokesperson from Hong Kong said they did not comment on speculation.

Sources said Ambani had approached Morgan Stanley and Hutchison's adviser Goldman Sachs with a clear direction that he would pick up 100 per cent stake in the company and was not interested in negotiating separately with the Ruias later.

"If the deal happens, it has to be 100 per cent and the Ruias and Hutchison both have to be out. There is no question of having negotiations later on with the Ruias after buying Hutchison," said a source.

At an enterprise value of $12-14 billion, the Ruias' 33 per cent stake is already worth an attractive $4-5 billion. Sources said the Mittals of Bharti had also informally sounded out the Ruias, though Sunil Mittal said nothing was happening at the moment.

Hutchison's advisers are believed to have also sounded out the Tatas but they declined to enter the race.

Sources close to the Ruias said the group had been averse to taking too much debt on its books to buy out its partner's 67 per cent stake, which could cost around $8 billion, especially at a time when the company had restructured and cleaned up its large steel and oil debts.

"With valuations at a peak in the telecommunications business, it is a windfall for the Ruias," said an analyst closely watching the deal. However, they have been approached by some bankers and telecom companies in case they are interested in bidding for the Hutchison stake.

Ambani is expected to close in on a deal in the next few days at an enterprise value of $12-14 billion. His adviser UBS has already roped in buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt, Ambani has enough resources to strike the deal.

However he may face competition from Malaysian telecommunications company Maxis, which may also put in an offer.

[KumaarShah 143]

The way things are going, whoever gets to buy Hutch will definitely not be in a position to offer lower tariffs at all. At an estimated $17 billion, the cost would be too, too high for anyone to sustain. So it will not be in the consumers interests at all. At around Rs 70000 to Rs 80000 Crores, the interest per month itself would be a mind-boggling Rs 350 to Rs 400 Crores at a nominal 6% pa interest. This apart, the network has to be strengthened all over the nation, which will also add up to the costs. Who will pay all this? We, the consumers

will pay for all this eventually.

If ADA picks it up, definitely existing and newer Hutch customers will have to face higher tariffs. This apart, people fantasising free onnet between R2H will be in for a rude shock, as ADA will definitely look to improving ARPUs and not reduce the ARPUs. Also seamless roaming between CDMA and GSM aka China Unicom will be a far fetched possibility, though not impossible.

As Petar has already said earlier, if the Ambanis really want it, they will pay any price for it. And as linuxguy also has said earlier, no one is acceptable except Reliance. Also ADA will increase tariffs universally across GSM and CDMA when he has over 50mn customers. Airtel and others will follow suit and we will once again have high tariffs. Maybe BSNL will act as a dampener to all this. But then you know Ambanis, they will buy out the babus also and let the customers suffer.

So, Let us hope that Reliance does not get Hutch.

[linuxguy 0]

I love it when someone agrees with me Yup but look at it this way, Airtel, BSNL and all others will then try to leech off Reliance's customers. So Reliance better not displease us or else we will rather shift to the cheaper options and Reliance will have a SHRINKING subscriber base

[KumaarShah 143]

Hutchison Whampoa not happy with bids

TIMES NEWS NETWORK

[ FRIDAY, DECEMBER 22, 2006 11:54:04 AM]

Hutchison Whampoa is believed to have said that bids received till now did not reflect the true value of HEL. This could be another reason prompting RCL to raise the bid, said sources.

Essar Group vice-chairman Ravi Ruia is currently in London and is believed to be in talks with Vodafone. Speculation is also rife that RCL may approach Malaysia’s Maxis for a combined bid to take on Vodafone if the UK giant offers a very high price for HEL. When contacted, the Reliance spokesperson refused to comment on all the above. Riding on reports that RCL has put in a $16-17 billion bid for HEL, its stock price moved up 3.16% to close at Rs 461.70.

RCL had earlier tied up with Blackstone, KKR, Texas Pacific and UBS, but industry sources see the move to rope in four more banks as an indicator of the company going all out to secure HEL.

This is because, buying out HEL in addition to increasing the company’s subscriber base by 78%, will also enable the company to overtake Bharti Airtel, which is currently the largest cellular operator in India. Additionally , Anil Ambani has been looking at aggressive expansion in GSM, the technology used by 70% of India’s mobile population

Link Courtesy: http://economictimes.indiatimes.com/articleshow/892304.cms

Vodafone confirms its plans to acquire Hutch

EconomicTimes.com

[ FRIDAY, DECEMBER 22, 2006 03:30:07 PM]

LONDON: It's finally happened. Vodafone has finally confirmed that it is planning to jump into the fray for acquiring Hutch Essar, along with Reliance. "The board of Vodafone is considering the acquisition of a controlling interest in Hutch Essar in India. Such a transaction would be consistent with its stated strategy of seeking selected acquisition opportunities in developing markets," the company said in a statement.

The process is at an early stage, and it may or may not lead to an transaction it further clarified.

Vodafone, a company not usually given to comment on speculation, made its position clear after consistent media reports that its board is meeting to consider making a $13 bn for Hutch Essar, and affected its share price negatively.

Vodafone has interests in emerging markets including Egypt, Romania and India - and underlined its ambitions for further expansion in similar markets at an investor meeting earlier this month. Vodafone's board believes that India's mobile market has great potential, the company said, justifying its interest.

The news came after it unveiled a £3.3bn half-yearly loss in November as it was hit by higher interest rates, competition and some of its assets being worth less than it thought.

After Corus, this makes Hutch Essar the second planned takeover that moves into contested territory, and may spark off another bidding war with Reliance Communication.

Link Courtesy: http://economictimes.indiatimes.com/Vodafo...show/900663.cms

Edited December 22, 2006 by khs123

[Greens 21]

If Reliance takes over Hutch its good for current and future competitors.

Else there will be a great bloodbath, once Reliance launches its own GSM network with unmatchable tariff.

let's see who finishes first and what happens in the end...

[linuxguy 0]

$13 billion bid by vodafone is nonsense as the minimum valuation of HEL is at $14.4 billion

[h1ghlander 9]

This thing seems to take more time cos of x-mas holidays

[Sadikk 301]

Vodafone seems to me only creating hurdles for reliance as its not genuinely interested, as they have already 10% stake in bharti and didn't had any plans to get hold in any other telecom than bhartis.

As far as i know reliance will hit the target with or without MAXIS by 28th of this month.

Low or high tariffs comes very later somewhere in 3rd quarter of 07 as they will not get into another battle very after this HUTCH-ESSAR war.

Ruias are lucky and in WIN-WIN situation at this very time, as they wont get better value than this, never ever.

Dont know why but am ADAGs side this time