Vodafone deal hots up telecom sector in M

New Delhi, Feb 12 (UNI) With the British telecom major Vodafone Plc winning away the coveted Hutchison Essar in a 19 billion-dollar-deal, the takeover is expected to give the telecom sector top slot in the sectoral ranking of the M&A table, which is likely to touch a 100 billion dollar mark this year.

The number one position till last year was dominated by the Information Technology sector at three billion dollars, IndusView, the India-focused cross-border advisory firm said today.

The latest mergers and acquisitions (M&As) involving Indian firms reflect growing global confidence in the country's economy and its strong fundamentals, Commerce and Industry Minister Kamal Nath said in the capital today.

The India M&As race is likely to touch a 100 billion dollar mark this year with the current M&As so far being pegged at 40 billion dollars, twice the value in the whole of last year and 10 times the corresponding period, the advisory firm said.

''The year 2007 is on track proving to be a year of 'mega deals'.

Remarkably, while last year the deals were one of volumes game, this year will be more of value driven and is expected to touch the 100 billion mark,'' said Mr Rishi Sahai, Board Director, IndusView Advisors.

Just half way through the first quarter of 2007, the country has witnessed two cross border deals -- acquisition of Hutchison Essar by UK Vodafone Group Plc (inbound) for 19 billion dollars and UK's largest steel maker Corus Group Plc by India's Tata Steel Ltd (outbound) for 12.1 billion dollars, Mr Bundeep Singh Rangar, Chairman of IndusView, said.

The acquisition of Hutchison Essar by British telecom giant Vodafone Plc reinforces the reciprocity between Indian and the UK companies seeking to unlock the potential in emerging economies on one hand and harnessing the size and scale of global operations on the other, Mr Rangar added.

''India is the second largest investor in the United Kingdom in terms of a number of projects, while the UK is India's fourth largest trading partner and the fifth largest source of foreign investment into India.'' The acquisition gives a boost to Vodafone's plans to drive its future growth and value proposition to its shareholders through significant inroads in emerging markets. And the Indian market is one that could not be ignored, which is growing at more than six million subscribers a month and expected to reach a mobile subscriber base of 348 million by 2010 from the current 143 million.

The company's presence in the Indian market is currently a miniscule 10 per cent through its stake in Bharti Airtel Ltd, India's largest GSM mobile service provider that the company will have to in any case forego.

However, going by the regulatory provisions, Vodafone will have to go with an Indian partner as its stake in the acquired company cannot exceed 74 per cent. After buying out 67 per cent shareholding of Hutchison Telecom International Ltd (HTIL), a subsidiary of Hong-Kong based Hutchison Whampoa Ltd, the options are wide open for other entities that might desire to partner Vodafone -- including the diversified Essar Group that holds 33 per cent in the company.

UNI