— PHOTO: SHANKER CHAKRAVARTY

COMPLEMENTARY STRENGTHS: Arun Sarin (left), CEO, Vodafone, and Ravi Ruia, Vice-Chairman, Essar Group, addressing a press conference in New Delhi on Thursday.

NEW DELHI: Telecom multinational Vodafone and the Essar group on Thursday reached an agreement to jointly run the mobile services company Hutch-Essar Ltd. (HEL), which will be renamed Vodafone Essar. In due course, the products and services will be marketed under the Vodafone brand. The aim of the country's fourth largest mobile company is to become the number one company in three years, Vodafone CEO Arun Sarin said at a news conference here.

The joint venture in which Vodafone holds 52 per cent, will have Ravi Ruia as the company Chairman. "It is our long-standing tradition to make the local partner the chairman to guide us. We intend to be a successful company and are aiming at a long-term partnership,'' said Mr. Sarin who would be the Vice-Chairman. The reconstituted board would have eight members from Vodafone and Essar would nominate others. Vodafone would have the right of first refusal to buy the share of minority shareholders — current Hutch-Essar chief Asim Ghosh and former majority equity owner Analjit Singh.

Brand transition

"Hutch is a good brand which is deeply embedded in the Indian society, while Vodafone is a global brand. We will continue with dual branding and then move the Hutch brand gently into Vodafone. We have done this several times but will be careful so as not to lose the good brand attributes of Hutch,'' he added.

Asked whether it was a partnership of equals with Essar holding 32 per cent of the equity and Essar 52 per cent, Mr. Sarin said the notion was a "state of mind'' as Hutch would bring its experience of Indian conditions, while Vodafone would contribute its global experience.

Vodafone will be leveraging its relationship with a Chinese company for low cost handsets with the aim of making affordability a `non-issue' to break into the rural population as well as attract as many customers as possible from urban areas. Though the company has substantial 3G experience in other markets and India is about to introduce the service in a year's time, the focus would remain on the present business. "The story is to have as many customers as possible,'' the Vodafone CEO said.

Mr. Sarin said the acquisition of equity was in accordance with foreign direct investment norms and he was hopeful of receiving all government approvals in the coming weeks. He later called on Commerce and Industry Minister Kamal Nath and Communications and Information Technology Minister Dayanidhi Maran.

HTIL to pay $415 m

PTI reports:

Hutchison Telecom, which is selling majority stake in Hutch Essar to the U.K. giant, Vodafone, on Thursday said it would pay Indian conglomerate over $415 million (Rs. 1,865 crore) to ensure its smooth exit.

Under the settlement agreement, Essar would take all steps to ensure completion of the transaction and would refrain from initiating any action that may inhibit or delay the transaction, HTIL said in a statement.

Essar would give HTIL certain indemnities and waive any rights it may have in relation to the transaction.

Officials of Essar, which has been consistently maintaining that it has the Right of First Refusal, could not be contacted for comment.

In its statement, issued in Hong Kong, HTIL said it had reached a settlement agreement with the Essar Group in connection with the proposed sale of its entire stake in Hutch-Essar to British mobile giant Vodafone.

The announcement coincided with the joint press conference of Vodafone CEO Arun Sarin and Essar Vice Chairman Ravi Ruia to announce an agreement to jointly manage the Indian joint venture.

Hutchison Telecom International in turn has agreed to pay Essar $373.5 million at the closing of the transaction with Vodafone and a further $41.5 million and interest on the occurrence of certain events till the second anniversary.

Printer friendly page  
Send this article to Friends by E-Mail