Orascom, Altimo eye Hutch Essar

By Santosh Menon

LONDON - Egypt's Orascom Telecom said it had not ruled out joining the bid battle for Hutchison Essar, and Russian rival Altimo also indicated its interest in India's No. 4 mobile operator.

Orascom Chief Financial Officer Aldo Mareuse told Reuters that if the Egyptian company were to join the bid battle, it would probably look to buy Hutchison Essar's parent company, Hutchison Telecommunications International Ltd (HTIL), in which Orascom already owns a 19 percent stake.

Hong Kong-based ports-to-telecoms conglomerate Hutchison Whampoa owns a controlling stake in HTIL and has been studying bids for HTIL's 67 percent stake in Hutchison Essar, which has been valued by brokers at up to $20 billion.

Britain's Vodafone Group Plc and Indian groups Reliance Communications, Essar and Hinduja are in the race to buy Hutchison Essar to gain a strong foothold in the world's fastest growing mobile market.

"We could do it (mount a bid) at the Hutch Essar level," Mareuse said in an interview on the sidelines of a telecoms conference. "But it's probably more interesting to do it at the HTIL level. Frankly speaking, it's the same, because 80 percent of HTIL's value is from Hutchison Essar".

"We're keeping all options open," he added. "We could buy it (Hutchison Essar) or sell it (the stake in HTIL). Depends on the price".

India's Essar group owns a third of Hutchison Essar and claims to have the right of first refusal on HTIL's stake in it.

Mareuse said his company, controlled by Egyptian businessman Naguib Sawiris, was in a "very comfortable position", because partner Hutchison Whampoa could not sell its controlling stake in HTIL until end-2007 without offering it first to Orascom.

The Wall Street Journal reported last week that Vodafone and Reliance were considering buying Hutchison Whampoa's majority stake in HTIL to gain control of Hutchison Essar in order to get around the Essar group's refusal to exit the asset.

ALTIMO IN FRAME

The bid battle for Hutchison Essar got another twist as Russia's Altimo, the telecoms arm of Russian conglomerate Alfa group, said it was in talks with the families behind the Essar and Hinduja groups about a role in the bidding.

Altimo Chief Financial Officer Teijo Pankko told Reuters in a separate interview that his group could look to fund either families' bids in return for a minority stake.

"It's (Hutchison Essar) of natural interest. If there is a structure of transaction where we can, let's say, have a role and we are welcome, we'll do it," he said, adding that the group had not carried out due diligence on the business and had no plans to do so.

Pankko said the spiralling valuation of the Indian firm since the bid battle began last month had caused it some discomfort, but Altimo was not prepared to walk away.

"If the business world believes in it, why shouldn't we," he said, adding that the group would not have any problem raising money for a bid.

"For a good opportunity, we're always able to find cash. Many of our businesses are cash-generative like the oil business. Even at Altimo we have very low leverage," he said.