Essar does not have right to first refusal: Vodafone

New Delhi, Feb 14: Vodafone Chief Arun Sarin today said Essar group does not have the right to first refusal over the British telecom giant's 11.1 billion deal to buy a controlling stake in Hutchison Essar.

''With respect to Vodafone, Essar does not have right of first refusal,'' Mr Sarin said.

Essar, that owns a third of Hutchison Essar, a joint venture with Hong Kong based Hutchison Telecom International Ltd, has claimed rights of first refusal in any sale in the company.

Hutchison has said the right would apply only if it sold its stake to certain Indian companies. On Sunday, Vodafone said it would acquire a 67 per cent stake in Hutchison Essar from Hutchison Telecom for 11.1 billion dollars.

Mr Sarin said the current head of Hutchison Essar Asim Ghosh would be retained.

''Asim Ghosh is a very good CEO and very good leader. He founded the firm. We are very happy with him. He will continue in that role,'' Mr Sarin said.

Vodafone said that the exisiting partners had agreed to retain their holdings and become its partners.

Another partner Ranbaxy's Analjit Singh said that it would not want to dilute its holdings.

According to FDI norms in Telecom, foreign firms are not allowed to hold more than 74 per cent of an Indian telecom player.

Essar, which owns 33 per cent of Hutchison Essar, will make a decision on its stake in one month, Mr Sarin told reporters here today.

Vodafone's proposed purchase of a 67 per cent stake in Hutch must be completed within a year, Mr Sarin said.

Hutchison Telecom earlier this week said it expects to complete the sale by April 2.

The purchase will give Vodafone, the world's largest wireless carrier by sales, more access to India. The company expects to have 100 million subscribers in the country.

Hutchison Essar had 23.3 million users at the end of December 2006.

Vodafone currently has a 10 per cent stake in Bharti Airtel, country's number one mobile player. It had bought its stake in Airtel for 1.5 billion dollars in 2005 and had been keen to raise it. But Bharti's shareholders -- Chairman Sunil Mittal and Singapore Telecom -- had been reluctant to sell. Mr Ghosh, Managing Director of Hutchison Essar, holds 6.25 per cent on behalf of Hutchison Telecommunications.

Britain's Vodafone on Sunday won the battle for Hutchison Essar, India's fourth biggest mobile phone operator, with a bid that valued it at around 18.8 billion dollars including debt.

The deal, Vodafone's biggest since its record-breaking 231 billion dollars (180 billion euro) purchase of Germany's Mannesmann in 2000, saw the company again fight off competing interest from Reliance Communications, Hindujas and Essar group.

The Essar group said it was evaluating a proposal from Vodafone to stay on as its partner.

''Nineteen billion dollars shows just what value has been created... Vodafone has invited us to be its partner in Hutchison Essar, an offer we are evaluating,'' Essar group Vice Chairman Ravi Ruia had said in a statement.

The deal is a crucial move by Vodafone's India-born CEO Arun Sarin, who is under pressure to expand the business amid slowing growth in the group's core European markets.

The deal kept to a strict set of acquisition criteria set by the company, Mr Sarin said. The deal would be a lucrative exit for Hong Kong billionaire Li Ka-shing, whose Hutchison Whampoa conglomerate controls the Indian operator through its majority holding in Hutchison Telecom.

UNI