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Vodafone bid for Hutch next month

New Delhi, Jan. 10: Vodafone Group Plc chief executive officer Arun Sarin today indicated that he will be stumping up a bid next month for Hutchison Essar after a day of hectic confabulations with influential ministers on Raisina Hill.

Sarin declined to indicate how much Vodafone — the world largest cellular telephony company by revenues — would bid for the 67 per cent stake that Hong Kong tycoon Li Ka-shing holds in India’s fourth largest cellular company along with two other partners.

Bankers who have been advising all the bidders and raising the cash to back those bids have put the enterprise value of Hutchison Essar at $18 billion though many expect it to rise if a bidding war breaks out.

Sarin — who met finance minister P. Chidambaram, commerce minister Kamal Nath and communications minister Dayanidhi Maran in separate meetings stretching through the day — has a battle on his hands with competing bids expected from Anil Ambani’s Reliance Communications and the Hindujas.

Sarin said Vodafone was “open to all options”, including a partnership with the Ruias of the Essar group who hold 33 per cent in Hutchison Essar.

Ravi Ruia of Essar also met the finance minister, while sources said Sunil Mittal of Bharti Airtel — in which Vodafone has a 10 per cent stake — called on Maran.

Sarin is reported to have briefed the Indian ministers on the company's plans for India and its interest in the fastest growing telecom market in the world.

Maran said he wanted “good players” like Vodafone to enter India, apparently forgetting that it already had its foot into the door through its stake in Bharti.

Kamal Nath said the deal should be transacted in a transparent manner and in accordance with the best commercial practices. Earlier this week, Nath had received a call from European Union’s trade commissioner Peter Mandelson urging New Delhi to ensure that Vodafone was treated fairly in the bidding war.

Nath had made a strong pitch to the EU and urged it to play fair when Laxmi Mittal was embroiled in a hostile bid to take over Arcelor earlier this year. Mandelson was only returning the compliment.

Sarin appeared to be satisfied with his talks. He told reporters after the meeting that the talks were “fruitful” and the “formal bidding was still a few weeks away”. When asked if that meant the bids would come by the end of this month, he said: “Later than that.”

Vodafone plans to expand in developing countries and exit markets where it doesn't have majority stakes.

Meanwhile, Mittal said Vodafone had no immediate plans to sell its 10 per cent stake in Bharti Airtel. “The question doesn't arise at the moment. We will have to watch the developments as they take place,” he said.

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