Troubled Emerging Telecom, Hutchison Essar in India is for SALE. However, HTIL and Essar both have so far denied sell out talks and guess what could be the morale of the employees working at Hutch – just like Zombies in Unix ? Parentless Child ?

Lets look at the regulations affecting or favoring the interested parties in Hutch.

  • India allows 74% Foreign Direct Investment in Telecom.
  • If an existing Telecom operator buys stake in another operator operating in the same circle, it will have to limit ownership at 10% or BUY the entire 100%.
  • The combined entity cannot hold more than 15 MHz of spectrum in Metros and Circle A and 12.4 MHz of spectrum in Circle B & C.
  • The total market share of the combined entiry should not exceed 2/3rd in any circle.

Maxis: Maxis of Malaysia is promoted by Person of Indian origin and has bought stake in Aircel India and has plans for PAN India operations. Aircel has also secured licenses in 16 other circles and hence makes strategic sense to bid for Hutch to get a PAN India presence.

Reliance Communications Limited: RCom already has PAN India presence in CDMA segment and wants to expand its GSM division by buying out Ruisas and HTIL of Hutch Essar. RCom overlaps Hutch operations only in West Bengal and Kolkatta, a issue that can be sorted out.

Vodafone Group Plc: All complexities are surrounding this cash rich company that was turned down in negotiaons by Bharti Airtel Ltd chief, Sunil Mittal for a joint bid. Vodafone bought 5% stake fromWarburg Pincus and another 5% stake in Bharti Enterprises, holding company of Bharti Airtel from Mittals earlier this year at $1.5 Billion. Sunil locked Vodafone in a Non-compete clause while divesting his stake – Vodafone shall not operate or buy stake in any competing operator for 12 months after they have sold their stake in Bharti Airtel Ltd. Any aggressive move by Vodafone to bid for Hutch will certainally upset the Mittals and they may invoke the non-compete clause.

Tags: Telecom India, Telecom Merger and Sellout, Hutchison Essar, Vodafone

2 thoughts on “Hutch Essar Sellout – Indian Telecom Regulations”
  1. Mr. Sarin, scraping the bottom of FTSE 100 does not mean a time for foolhardiness. Lets have investors who are committed to the space and India not ego bolstering moves. Every poorly thought out business acquisition means instability for India corp.

  2. Mr. Sarin, scraping the bottom of FTSE 100 does not mean a time for foolhardiness. Lets have investors who are committed to the space and India not ego bolstering moves. Every poorly thought out business acquisition means instability for India corp.

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