Essar to match Vodafone’s Hutch bid; Maxis, Qtel and Orascom drop out of race

3 Jan 2007

Reports in the Indian press say that Malaysia’s Maxis Communications and a consortium of Egypt’s Orascom and Qatar Telecom (Qtel) are no longer interested in bidding for a majority stake in India’s fourth largest mobile operator Hutchison Essar Ltd. Meanwhile Essar Group sources told Indian newspaper The Economic Times that the company is ready to match a fresh bid from the UK’s Vodafone Group, expected to be in the region of USD13 billion-USD14 billion. The bidding war for Hong-Kong based Hutchison Telecommunications International (HTIL)’s 67% stake in the joint venture is now a three-horse race between Vodafone, India’s Reliance Communications and Essar, which holds the remaining 33%. Sources close to the situation say that amidst rising valuations, Maxis was not keen to engage in a bidding war with the heavyweight trio, with HTIL apparently hoping to receive more than USD15 billion for its 67%. Earlier newspaper reports said that Essar had valued HTIL’s stake at USD11 billion, valuing the whole company at around USD16.4 billion, compared to an offer from Vodafone putting the cellco’s worth closer to USD18 billion. Orascom and Qtel had jointly expressed an interest to buy HTIL’s stake but have now decided against placing a formal bid. Sources quoted by the Economic Times said that Orascom had approached the Indian government seeking clarity over foreign investment and security-related issues before placing its bid, and had decided to pull out as its queries did not evoke a definite response.