UK telco Vodafone has acquired the 67 per cent stake of Hutchison Telecom International in Indian mobile company Hutchison Essar. The company is valued at $18.8 billion. So Vodafone will pay $11.1 billion to HTIL for the 67 per cent stake. Vodafone will assume net debt of approximately $2.0 billion. As of now, it looks like Essar will remain the minority partner with 33 per cent. Vodafone, however, said that it would make an offer to buy Essar’s stake at the equivalent price per share it has agreed with HTIL.
Vodafone also said in a statement that it will sell 5.6 per cent stake in Bharti Airtel to promoters for $1.6 billion. So Vodafone, which plans to retain the remaining 4.4 per cent stake, will remain a financial investor in Bharti. Both the companies have also reached an infrastructure sharing agreement which means they will compete and collaborate.
A statement said that while “Hutch Essar and Bharti will continue to compete independently, Vodafone and Bharti have entered into a MOU relating to a comprehensive range of infrastructure sharing options in India between Hutch Essar and Bharti.” Infrastructure sharing is expected to reduce the total cost of delivering telecommunication services, especially in rural areas, enabling both parties to expand network coverage more quickly and to offer more affordable services to a broader base of the Indian population,” the statement added.
The transaction is expected to close in the second quarter of calendar year 2007 and is conditional on Indian regulatory approval. HTIL
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