Vodafone CEO in India to smooth market entry

Vodafone Group PLC’s Chief Executive Officer (CEO) Arun Sarin is visiting India, even as the British operator’s bid for a majority stake in Indian mobile services operator Hutchison Essar Ltd. has run into tough competition. Sarin is scheduled to meet with government officials and local businessmen during his three-day visit starting Wednesday.

Vodafone last month confirmed its interest in acquiring a controlling interest in Hutchison Essar, a GSM (Global System for Mobile Communications) services provider. Foreign companies can hold up to 74 percent of the equity in a telecommunications services company in India, according to Indian government rules.

Sarin told reporters in Delhi Wednesday that the company would be submitting its formal bid in a few weeks.

Hutchison Essar’s majority stake holder Hutchison Telecommunications International Ltd., a subsidiary of Hutchison Whampoa Ltd., said in December that “various potentially interested parties” had approached the company to buy its 67 percent stake in Hutchison Essar, but there was “no assurance that a sale may result from these approaches.” The contenders for Hutchison Telecommunications’ stake are many including a large Indian operator, Reliance Communications Ltd.

The Essar Group which holds a minority stake in Hutchison Essar has also shown interest in acquiring Hutchison Telecommunications’ stake in the company, according to informed sources. By a share holder agreement between Hutchison Telecommunications and Essar, the Indian partner has the right of first refusal, although Hutchison Telecommunications holds that this right extends only to bids by Indian companies, the sources said.

India’s mobile services market has been booming with the country adding more than 6 million new users each month. The country added 6.8 million wireless subscribers in November, taking the total number of subscribers to 143 million, according to the Telecom Regulatory Authority of India (TRAI) in Delhi.

Vodafone already has a 10 percent stake in another Indian operator Bharti Tele-Ventures Ltd. (BTVL).

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