Hutch to be renamed as Vodafone-Essar

NEW DELHI: Vodafone chief Arun Sarin today announced that his company has reached an agreement with the Essar group on the Hutch deal.

This follows Vodafone's announcement made on February 11 to acquire Hutchison Telecommunications International Limited’s (HTIL) controlling interest in Hutchison Essar. Essar is and will continue to be a 33% shareholder.

However, in due course, the business will market its products and services under the Vodafone brand.

“The new company will be known as Vodafone-Essar and Ravi Ruia has accepted to be the chairman of the new board. Analjit Singh and Asim Ghosh who hold stakes in the company on their personal level will continue to do so and Asim will continue to be the chief executive officer (CEO) of the new company,” he informed the media here. Asim Ghosh will report to Paul Donavan, CEO of Vodafone’s emerging markets division.

Sarin said that the deal is subject to approval of Indian laws and the company has submitted its proposal to the Foreign Investment and Promotion Board (FIPB).

“Our deal is subject to the Indian government’s approval, and we have agreed with Essar group for rapidly expanding the operations of the mobile company in India,” he said further.

Terming Essar as a ‘natural ally’ – a stand which he had been sticking to right from day-one of the deal, the Vodafone CEO said: “We will take communication to the next level in this country and bring in affordable communications to India,” he said.

“We will accelerate capital network to increase mobility and the business by offering low-cost handsets as well as introducing various features such as money-transfer through mobile,” Sarin said.

In his remarks, Ravi Ruia of Essar said that the two companies would together take forward the growth of the company. “We are happy to be partners and will create value in the mobile space. “Vodafone will offer its excellent suite of products to India and we will emerge as the most valuable and potent partnership in the country,” he added.

Under the terms of the partnership, Vodafone will have operational control of Vodafone Essar. Essar will have rights consistent with its shareholding, including proportionate Board representation.

Ravi Ruia will be appointed by Vodafone as chairman of Vodafone Essar and Essar will appoint Arun Sarin as vice chairman.

Essar will have certain liquidity rights including, between the third and fourth anniversaries of completion, and subject to regulatory requirements, an option to sell its 33% shareholding in Vodafone Essar to Vodafone for US$5 billion or an option to sell between $1 billion and $5 billion worth of Vodafone Essar shares to Vodafone at an independently appraised fair market trading value.

Vodafone expects to complete the acquisition in the coming weeks.

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