Hutch-Essar bidding deadline set for tonight

09 February 2007

Hong Kong-based Hutchison Telecommunications (HTIL) is learnt to have set today midnight, Hong Kong time, as the deadline for submitting the offers by interested bidders for acquiring its stake in mobile telecom operator Hutchison Essar. The HTIL board is likely to meet this Sunday to consider the bids. HTIL, along with associates, own 67-per cent of Hutch-Essar while the Essar group holds the rest.

Global telecom giant Vodafone, the largest telecom company in the world by revenues, and Reliance Communications are considered to be the front runners in what would be the single largest deal ever in Indian telecom industry. London-based NRI business group Hinduja is the third interested party. Hindujas have tied up with Qatar Telecom for a joint bid and are currently in the process of completing a due diligence of Hutch-Essar.

The Essar group has publicly reiterated its interest in acquiring the remaining stake from HTIL. The group has claimed to have already tied up the required finance from a group of international banks including Citigroup.

Though the group has all along maintained that it intends to remain in the telecom business, most analysts and industry observers think otherwise.

They reckon that Essar would sell its stake if the offer is good enough. If the acquirer of HTIL stake is an overseas player like Vodafone which can hold only up to 74 per cent as per FDI regulations, the Essar group may decide to remain a minority partner.

Essar group continues to maintain that they have the right of first refusal, if HTIL wants to dispose its holdings. However, HTIL maintains that Essar''s first right of refusal would be applicable only if the stake sale is to any of the large Indian telecom groups. Essar group had sought legal opinion to support its stand and there were rumours that the group would approach the court. A television channel has today reported that Essar group may stay away from tonight's bidding following legal advice.