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Mavodafonehutchdeal 110929111338 Phpapp02 PDF
Mavodafonehutchdeal 110929111338 Phpapp02 PDF
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Subject : Mergers & Acquisitions Project
Project : Vodafone Hutchsion Deal
In-charge : Ms. Neetika Batra
Students Engaged : Amit Puri 2012BLP013
Anuj Thakur 2012BLP024
Hersh Sharma 2012BLP049
Janmaijai Dhayani 2012BLP037
Karan Lalit 2012BLP026
Kushagra Sharma 2012BLP023
Graphical representation of M&As…
CDMA/
Technology GSM GSM
GSM GSM GSM CDMA GSM GSM
Why India ?
Let’s go back to Dec 2006…
Population in Million Mobile penetration in %age
18.3 20
200
16
150 12.8
9.1 225.21 12
100 7.0 206
5.1 8
140.3
50 98.4 4
53 76
0 0
2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 (as
of June2007)
• Horizontal Merger
• Vertical Merger
> Two companies that are in direct competition
• Market-extension
and share the sameMerger product lines and
• Product
markets. Extension
• Conglomeration
Transaction
Nature of Transaction.
Share Asset
Acquisition Acquisition
Cash Payment to
Injection Seller
Retained Earnings
Key highlights of the Deal.
Vodafone
Reliance Communication
Essar
Hindujas
Orascom (Egypt's telecom giant)
Financial Implications.
The Essar Group (“Essar”) currently holds a 33% interest in Hutch Essar and
Vodafone will make an offer to buy this stake at the equivalent price per
share it has agreed with HTIL
ROI exceeding the local risk adjusted cost of capital in the fifth year and an
IRR of around 14%.
Financial Implications. (contd.)
Vodafone will continue to hold its 26% interest in Bharti Infotel Private Limited
(“BIPL”), which is equivalent to an indirect 4.4% economic interest in Bharti.
Vodafone's path towards building its Indian empire was far from easy.
Numerous
financial and regulatory roadblocks presented themselves. It had already made
one foray into the market in 2005, when it bought a 10% stake in Bharti
What could have been different ?
Some say > Vodafone may have overpaid for Hutchison Essar.
Average revenue per user for Indian telecoms providers is Rs5,400, while the
operating margin is around 32% or Rs1,728 per customer per year.
• “It seems Vodafone will take a long time to break even in the Indian market”.
•“Innovative services may give Vodafone an edge, but it will not be a significant
one”.
Legal Issues.
Alleged that with the purchase of a majority of shares of the Hutch by Vodafone, the FDI
in
the telecom service provider had crossed 89.03%.
FIPB seeks details on 15% stake held by minority shareholders Ashim Ghosh and
Analjit
Singh in its Indian mobile venture Hutch-Essar.
Court directs authorities to initiate prosecution under various sections of the Foreign
Exchange Management Act (FEMA).
A petition against Asim Ghosh- MD Hutch, and Analjit Singh, saying huge amount
of
funds were transferred through illegal routes to many countries. The stake is being
held
indirectly by the two individuals against Asim Gosh, MD Hutch, and Analjit Singh on
Taxation Issues.
Thank You!!!