Talk at ease

Mumbai, March 15: Even as security issues shroud Orascom Telecom’s equity holding in Hutchison Essar Ltd (HEL), another stake shake is brewing at the domestic cellular giant with the Hindujas calling up probable bidders to sell their effective 5 per cent shareholding in the company.

The sell-off plans of the Hindujas is happening when the telecom sector is abuzz with big-ticket transactions.

The flurry of deals started with the Kotak group’s sale of its effective 8.33 per cent stake in HEL to Analjit Singh and India Telecom Investments for Rs 1,019 crore. Soon after, Tata Teleservices offloaded a little less than 10 per cent to Temasek for $300 million. A few days later, Telekom Malaysia picked up 49 per cent in Spice Communications for $178.8 million. This week, Anil Ambani merged Reliance Infocomm with Reliance Communication Ventures for an undisclosed sum.

The Hindujas indicated their intention to exit HEL on Tuesday when Hinduja TMT said a share purchase agreement allowed them to acquire the 1.23 per cent stake of Pacific Horizon in HEL. Pacific Horizon is a subsidiary of Sumitomo Corporation. The agreement lets Hindujas buy Sumitomo’s 100 per cent stake in Pacific Horizon, which holds 24.12 per cent in IndusInd Telecom Network Ltd (ITNL).

ITNL holds a 5.11 per cent stake in Hutch, which translates to Pacific Horizon holding effective 1.23 per cent stake in Hutch. The agreement allows Hindujas to buy 50 per cent of Pacific Horizon up front and the remaining 50 per cent later.

With the acquisition, Hinduja TMT and its wholly owned subsidiary, InNetwork Entertainment, hold 91.54 per cent of ITNL corresponding to a 4.68 per cent effective stake in Hutch.

Sources said the Hindujas are consolidating their shareholding prior to an outright sale in Hutch. They said the market is keeping a note on the value of their shareholding. On the basis of the deal between the Kotak group and Analjit Singh, that assigned a value of $6 billion on HEL, analysts said the Hindujas may be richer by another Rs 500 crore for their effective 4.68 per cent stake in Hutch.

Sources said the Essar group is interested in buying the Hindujas’ stake in HEL. They feel Hindujas could drive a hard bargain, as the Ruias want a larger share of HEL.

A buyout will see Ruias owning close to 38 per cent in HEL. “While one could get a valuation of around Rs 500 crore for their stake in HEL, this figure could rise if the group is indeed negotiating with the Essar group. Therefore, the Hindujas will try everything to get a better price given the current circumstances,” an analyst said.