Hutch-Essar executives to stay after possible takeover

New Delhi, Jan 14: In the event of Britain's telecom giant Vodafone picking up stake in Hutchison-Essar, senior executives of India's fourth largest telecom conglomerate will not be disturbed.

Managing Director of Hutch-Essar Asim Ghosh and many senior executives have a strong multinational FMCG background which is a qualification much sought after by the mobile telephony industry, analyst say.

Hutchison-Essar also has a strong executive retention record and also gives emphasis on continuity.

Also, Hutch's ad campaigns targeted at the high-end customer enjoys high brand recalls. A break in management continuity, analysts say will have a debilitating effect on the brand value of the company.

The current executives are also important for sustaining operations and to some extent justifying the valuation itself.

Many telecom companies, including Reliance Communications and Tata Teleservices, have expatriates working for them -- some hired and some on deputation -- as there is an amount of shortage of telecom talent in the country.

Meanwhile, reports in western media has said that Essar is determined to prevent the British telecom giant Vodafone's acquisition bid of Hutch-Essar.

This is contrary to Vodafone's Chief Arun Sarin's recent statement in New Delhi that Essar is a "natural partner" for picking up stakes in Hutch-Essar.

Quoting unnamed sources the newspapers have pointed out that Essar may try to outbid Vodafone or take the issue to court.

According to reports, Essar will fight in court if Vodafone attempts a move towards acquiring the stakes of Hutch-Essar.

The papers said Essar could also try to team up with another bidder Reliance Communications against Vodafone.

The Financial Times said Vodafone could be forced to raise 17 billion dollars expected offer to prevent Essar from exercising "blocking tactics" over a deal.

Mr Sarin said on Wednesday that his company will place their bids mid-February to acquire stakes in Hutch-Essar.

Hutch-Essar, the country's fourth largest mobile player, is 67 per cent owned by Hong Kong-based Hutchison Telecommunications International Ltd and 33 per cent by Indian conglomerate Essar.

Mr Sarin who met Communications and IT Minister Dayanidhi Maran said the government wanted good companies to enter the country.

''We want good players to come to India. Whatever they do (thereafter) is their business,'' Mr Maran said.
Meanwhile, Max India Chairman and an equity holder in Hutchison Essar, Analjit Singh said an alliance between Essar and the British telecom giant will be the best option.

Mr Singh's statement comes close on the heels of Mr Sarin's comments that Essar, which has 33 per cent stake in the venture, was the 'natural partner'.

The Vodafone chief also met Bharti Airtel Chairman Sunil Mittal, in which Vodafone holds 9.9 per cent, followed by a meeting with Commerce and Industry Minister Kamal Nath.

Mr Maran said, ''It also proves that we made the right decision in increasing FDI cap to 74 per cent.'' The FDI policy for telecom sector was 'a clear signal' to the foreign players about the growth and opportunities in the Indian telecom market.

Commerce Minister Kamal Nath, asked the UK telecom giant to follow best commercial practises in its bid to acquire Hutch-Essar.

''It (a deal) should be done in a transparent manner in accordance with best commercial practices and in the best interest of all stakeholders,'' the Minister told the Vodafone Chief.

Bankers estimate the worth of the bid as much as 18 billion dollars.

Vodafone faces competing bids from Reliance Communications Ltd, and Hinduja Group to acquire a 67 per cent stake from Hong Kong billionaire Li Ka- shing.

Hutchison Essar is adding one million customers a month in a country where only 13 per cent of the population own a cell phone.

Vodafone, based in Newbury, England, is willing to partner with India's Essar Group, owner of the remaining 33 per cent stake, Sarin said. We are open to all options,'' he added.

UNI