Essar to buy stake in Hutchison mobile firms

NEW DELHI: The Essar group is close to acquiring a 30 per cent stake each in

two Hutchison controlled cellular phone companies offering services in Kolkata

and Mumbai, a spokesman for the group told Reuters on Tuesday.

The group hopes to finalize the deal in the next two to three months, he

said. Consulting firm Arthur Andersen had valued the 30 per cent stake in Usha

Martin Telekom, the company offering services in Kolkata, at $35 million (Rs1.69

billion), he added.

The Essar group's interests span steel, shipping and oil refining, apart from

telecoms. Hutchison companies operate mobile phone networks in Mumbai, New

Delhi, Gujarat and Kolkata. They have between them over a million subscribers,

making the Hong Kong-based telecoms giant one of the top three mobile operators

in India.

The Economic Times newspaper said on Tuesday valuation of the Mumbai company,

Hutchison Max Telecom Ltd., was still in progress. Hutchison holds 49 per cent

in the venture and another 41 per cent through Telecom Investment India Ltd., a

company floated with domestic financial service group Kotak.

Hutchison and Essar also have another joint venture, Barakhamba Sales and

Services Ltd., which won licenses in July to be the fourth cellular service

provider in the two states of Karnataka and Andhra Pradesh and in the city of

Chennai. These companies have still to begin operations.

Up to four companies are allowed to offer mobile phone services in each of

India's 21 telecom zones. Foreign companies are not allowed to hold more than 49

per cent stake directly in a domestic telecom services company.

(C) Reuters Limited.