HTIL looks to increase Essar stake

27 Apr 2006

Hong Kong’s Hutchison Telecommunications International Ltd (HTIL) has had its USD400 million bid for a 5.11% stake in Indian mobile operator Hutchison Essar rejected, according to the Economic Times. HTIL made the offer to fellow Hutchison Essar shareholder the Hinduja group, but the bid was immediately dismissed for undervaluing the operator. Sources claim Hinduja want nearer USD600 million for the stake. HTIL currently holds a 49.6% stake in Hutchison Essar.

Meanwhile, the Department of Telecom (DoT) has written to the Prime Minister’s Office, clearing an indirect stake sale in Hutchison Essar to Egypt’s Orascom Telecom earlier this year. Essar Group Chairman Shashi Ruia wrote to the DoT in February raising concerns about the sale of 19.3% stake in HTIL to Orascom, giving the Egyptian company an indirect holding in the Indian cellco. He had said that the transaction has security implications, as Orascom operates telecom services in Pakistan and Bangladesh. However, the DoT has cleared the sale as Indian law permits transactions between foreign shareholders without extra investigation if there is no structural change in the shareholding of the Indian company.