New Delhi, Feb. 21: Hong Kong-based Hutchison Telecom International Limited (HTIL) today signed a three-year non-compete agreement with British telecom giant Vodafone as part of the $11.08-billion deal under which Vodafone picked up a majority stake in Hutchison Essar from Hutchison Telecom.

HTIL will also convene an extraordinary general meeting on March 9 to vote on the sale of its 52 per cent stake in Hutchison Essar to Vodafone. On February 12, HTIL had sold its controlling stake in Hutchison Essar — the country’s fourth largest mobile operator — to Vodafone for $11.08 billion based on an enterprise value of $18.8 billion for Hutchison Essar.

Hutchison Whampoa, which holds a 49.66 per cent stake in HTIL, has given an undertaking to Vodafone to vote in favour of the deal.

Meanwhile, the HTIL board in a letter to shareholders said a three-year agreement with Vodafone has been signed that bars HTIL from competing with Hutchison Essar. “HTIL cannot enter any business in India, establishment of telecom services or related infrastructure facilities or equipment,” the letter said.

HTIL cannot offer jobs to any key employees of Hutchison Essar within six months of completion of the sale, according to the terms of the agreement.

The sale is expected to be completed by either April 2 or the sixth business day after the last conditions have been satisfied for the deal, whichever is later, the letter said.

The completion of transaction is conditional upon the satisfaction or waiver of all requisite consents of the FIPB to the sale and purchase of the share, the letter said.

“If the FIPB condition is not satisfied or waived within 120 days of the date of agreement, the company may, in its sole discretion at anytime thereafter terminate the agreement,” said the letter.

Both Vodafone and HTIL spokespersons were unavailable for comments on further details of the FIPB approval.

HTIL estimates a pre-tax gain of about $9.61 billion from the transaction and a net cash inflow to the group of approximately $11 billion.

The company has not made any final decision on the use of proceeds from the transaction. Sources said the proceeds may be utilised to reduce HTIL’s debts, pay special dividend to shareholders and fund investment opportunities in new and existing markets.

The Indian business is HTIL’s largest asset and after the deal, the company would be left with operations in Hong Kong, Israel, Thailand and other emerging markets.