Presented by ² Nayan Patel

INTRODUCTION

In 1992 Hutchison Whampoa and its Indian business partner established a company that in 1994 was awarded a license to provide mobile telecommunications services in Mumbai.

By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had acquired interests in six mobile telecommunications operators providing service in 13 of India's 23 licence areas and following the completion of the acquisition of BPL that number increased to 16.

A subsidiary of Essar Group) that held licence applications for the seven remaining licence areas. it announced the acquisition of a company (Essar Spacetel . Then it also targeted business users and high-end post-paid customers which helped Hutchison Essar to consistently generate a higher Average Revenue Per User than its competitors.Continued - In 2006. .

.Continued Vodafone maintains the 74 percent FDI limit. and the balance 11 per cent as a domestic investor. Vodafone can pick up another 22 per cent. 22 per cent is held abroad (Mauritius) as a foreign investor. therefore. while Essar holds 33 per cent. Analjit Singh and Asim Ghosh together hold 15 per cent. Hutchison held 52 per cent. Technically. In Essar s stake.

our network follows. The simple yet powerful advertisement campaigns won it many admirers. . minimalist look. with the tagline. Its successful ad campaign in 2003 featured a pug named Cheeka following a boy around in unlikely places.Continued - Hutch was often praised for its award winning advertisements which all follow a clean. Wherever you go.

at which time it changed its name to Vodafone Group. . Vodafone Group.Vodafone Vodafone was formed in 1984 as a subsidiary of Racal Electronics. the Company changed its name to Vodafone AirTouch on 29 June 1999 and. following approval by the shareholders in General Meeting. Following its merger with AirTouch Communications. reverted to its former name. on 28 July 2000. It was fully demerged from Racal Electronics Plc and became an independent company in September 1991.

With Google.Continued Vodafone announces agreements with both Microsoft and Yahoo! to bring seamless Instant Messaging services to the mobile which can be accessed from both the PC and mobile handsets. With eBay. . Vodafone announces its intention to develop a location-based version of Google Maps. Vodafone announces it is to offer the new eBay mobile service to customers.

emphasises Vodafone·s foray into emerging markets like Turkey. . when Vodafone was eager to make a mark in India ² world·s fastest-growing mobile market ² Hutchison Telecommunications International Ltd.Continued Arun Sarin Gets Stumped!. Romania. offered to sell off its majority stake in Hutchison Essar. Africa and India. At a time.

India has 2nd largest merket for mobile. he sold his stake in Star TV to Rupert Murdoch for $825 million. In the early 1990s. It is growing at the rate of 6 million subscribers per month. hutch want to sell ² Major Reasons for sell are : Hutch-Essar : mutual distrust The right time to quit Indian operations to finance other operations.Why Take Over Vodafone need Vodafone wants to expand into the asian markets. Li Ka-Shing was the 10th richest man globally in 2006. .

41% of the Indian mobile market. . Operating profits of Rs 1. present in 16 of 23 circles. Accounted for 41 per cent of Hutchison Telecommunication International·s revenues Revenues of $908 million (Rs 4.017 crore.HUTCH HUTCH HUTCH The biggest one is a presence in a market of 143 million subscribers that's growing at a rate of 5 per cent on a month-on-month basis Fourth largest mobile operator in India with 24.086 crore) in H1 2006.41 million subscribers 16.

Malaysia·s Maxis Communications Egyptian Telco Orascom .CONTENDERS IN RACE Essar Group Anil Ambani-owned Reliance Communications The UK-based Vodafone Private equity (PE) players.

VALUATION Average Revenues per User It had the highest ARPUs ² Rs 374(Avg Rs335) perspective of the buyer market share $54.8 billion Vodafone bagged Hutchison Essar.8 billion or $770 per subscriber . it valued the company at $18.

8 -0Hutch Essar debt: 1.47 -Value of 67% stake: 11.10 -Other Debt: 0.08 .33 -Equity Value: 17.63 -Net Value: 11.VALUATION OF HUTCH ESSAR -Value ($ billion) -Hutch Essar 100% enterprise value: 18.

6 per cent stake sale in Bharti. sold its 25 per cent stake in Swisscom Mobile and exited Belgium .FINANCING THE DEAL least leveraged $5 billion from the sale of its Japanese unit $1.62 billion cash from its 5. cash reserves in excess of $3 billion.

Vodafone already offers 3G elsewhere in the world.SYNERGIES CLAIMED Vodafone gets access to the fastest growing mobile phone market in the world that is expected to touch 500 million subscribers by 2010. ‡ Cellular penetration in rural India is below 2%. but also one of the betterrun companies with higher average revenue per subscribers. allowing data and video to ride on cellular networks. a region seen as the big telecom story . ‡ 3G is set to take off in India. but 67% of India·s population lives in rural India ‡ Hutchison-Essar is not just the #4 player. ‡ India is key to Vodafone strengthening its presence in Asia.

a non-governmental group. which alleged breach of foreign direct investment regulations. Ministry suggesting appointment of inspectors to investigate the actual ownership of mobile services company Hutchison Essar.HURDLES OF THE DEAL Telecom Watchdog. . The Foreign Investment Promotion Board (FIPB) had earlier sought the views of Law Ministry about Vodafone's proposed acquisition of Hutchison Telecommunication International Ltd's stake in the Indian mobile company.

a coup considering he entered the Indian entity for as little as $2. 78-year-old Li Ka Shing is famed for his ability to exit businesses at the right price. His deal with Vodafone. would give him $11.Men behind the deal Superman' Shing at home in Hong Kong. Li Ka Shing. Hutchison Whampoa.6 billion.1 billion. . Chairman.

CEO. Vodafone .Vodafone's CEO since 2003. Sarin's bid would give him access to 24. Arun Sarin.4 million customers in one of the world's biggest and fastest growing markets.

Chairman.Today Ambani said that his bid was on lines of `financial conservatism' as articulated earlier.He had earlier claimed that his group would be able to raise adequate cash to acquire Hutchison's stake in Hutch-Essar. Anil Ambani. in the face of `challenging valuations'. Reliance .ADAG .

But 55-year-old Canning Fok is the man in the hot seat.Li Ka Shing may call the shots in the Vodafone-Hutch deal. Canning Fok. and using the $20billion plus profits almost directly into 3G. Canning is best known for his push towards exiting the 2G space by selling out Orange in 1999. Chairman. Hutchison Telecom International Ltd .

advising on patent strategy. His experience in the telecom.D. drafting online trading rules for a stock exchange. .Durai focuses on mergers and acquisitions. and negotiating the procurement of a telecom networ. real estate and technology law. technology and media sectors includes assisting in domain name disputes.

‡ The Vodafone brand is relatively unknown in the Indian market. Besides.and India has one of the lowest ARPUs in the world. which is onethird partner in Hutch-Essar. who can manage the ¶environment· better. ‡ It has an uneasy equation with Essar. . ARPU growth is slowing. Besides the brand will cost money and take time ‡ Telecom valuations are at a high and this could mean it is years Vodafone recovers its multi-billion dollar investment ‡ Its big competitors are home-grown majors.IMMEDIATE CHALLENGES The cellular telephony is extremely competitive. Tht could be a source of problem.

STRAREGY TO GO AHEAD Rebranding Operations Essar·s option .