Hutch Telecoms slides on report of India deal delay

Hong Kong, Mar 28: Shares in Hutchison Telecommunications International Ltd. slid to a five-month trough on Wednesday after reports said government scrutiny could delay its planned sale of .1 billion in Indian assets to Vodafone Plc. .

By 0325 GMT, Hutchison Telecoms, which this year agreed to sell its majority stake in Hutchison Essar -- India's fourth-largest carrier -- to Vodafone, had slid 5.2 percent to HK.64.

Vodafone, the world's second-largest wireless operator, had been counting on the deal with Hutchison Telecoms -- an affiliate of billionaire Li Ka-shing's Hutchison Whampoa -- to expand into a fast-growing Indian telecoms arena.

But the local Economic Times reported on Tuesday that India's government was investigating the structure of the Hutchison Essar deal, to see -- essentially -- if it contravened caps on foreign ownership.

Vodafone's shares climbed 0.5 percent on Tuesday to 140.70 pounds.

For details from the report, please click on [ID:nBOM99028].

With more than 150 million mobile subscribers but a market penetration of only around 15 percent, India is the world's fourth-biggest mobile market -- behind China, the United States and Russia.

It is the fastest-growing major mobile market and is expected to overtake Russia this year. At its current pace of expansion, India will have half a billion mobile users by 2010.

Chief Executive Arun Sarin expects the envisioned Vodafone Essar, which will rank behind Bharti Airtel , Bharat Sanchar Nigam Ltd. and Reliance Communications , to become India's top operator in three years.

Vodafone plans to swap the Hutch brand in India with its own, accelerate capital expenditure, promote low-cost handsets and introduce new services suited to the vast country -- such as money transfers over cellphones.

But the agreed sale has not been problem-free: an earlier irritant to Vodafone's plans appeared resolved after Hutchison announced it had provisionally agreed to pay 5 million to Essar -- a major shareholder in the target firm -- in return for the Indian group's cooperation in completing the deal.

Reuters