Vodafone has intensified its activities in the run up to acquire a majority stake in Hutchison Essar. Vodafone has recently was involved in talks with SingTel for the sale of its 10 percent stakes in Bharti Airtel in India. According to the rules, this 10 percent stake Vodafone requires to offload if it wins the auction for Hutchison Essar. South East Asia’s leading telecom company, Singapore Telecommunications, already holds 31 percent stakes in Bharti. The reports suggest that SingTel was interested in the 10 percent stakes of Vodafone if it acquires Hutchison Essar.
Vodafone had made its intentions pretty clear for acquiring a controlling stake of Hutchison Essar to tap India’s expanding telecoms market. However, the company is being challenged by India’s Reliance communications, the Hinduja’s group and Indian group Essar, Hutchison’s minority partner in the firm.
A total of 67 percent controlling stake owned by Hong Kong based Hutchison Whompoa has been recently put on offer and valuation estimations for Hutchison Essar have shot up sharply from $13.5 billion to $20 billion as more bidders came into fray.
Vodafone is keenly interested to make acquisitions in emerging markets since it is struggling with slowing revenue growth in its core European businesses. Moreover, the bidding war has pushed the enterprise value of Hutchison Essar to a whopping $20 billion and even for Vodafone this amount will be proved to be troublesome but savings in capital spending can offset some of its problem.
