|
The competition for acquiring India’s third largest
privet mobile operator gets powerful. The present article tries to getting
a better understanding of this very interesting battle which has just
started.
Why Hutch Essar?
|
Subscribers
|
23 million
|
16.39 % of mobile market; biggest private GSM operator
after Airtel
|
|
New subscribers
|
1 million every month
|
Just behind market leader Bharti
|
|
Avg Revenue per User
|
Rs. 374
|
11.65 % over national GSM average.
Highest in the industry.
|
|
Circles
|
16
|
Present in all top circles
|
|
Revenue
|
Rs. 5800 cr
|
|
Hutch is India’s fourth largest wireless operator with a
subscriber base of little over 22 million. At an enterprise value that has
risen sharply from $14.4 billion (Rs. 64,800 crore) just a week ago to $24
billion, the stakes for acquiring India’s third largest
private mobile service Hutchison Essar are rising everyday.
That’s because Hong Kong-based Hutchison Whampoa has decided to get out
of Indian market.
The key player looking to acquire Hutchison Essar now are
the Essar Group, Reliance Communications, UK-based Vodafone, Verzino, and
the Hinduja Group. Malaysia’s Maxis communication and Egypt’s telecom
company Orascom, which had initially shown interest, seem to have backed
off.
Why is this Acquisition so Critical?
This could be the largest big ticket acquisition in the
world’s fastest growing mobile market for a long time to come.
This acquisition will pitch the acquirer very close or even
way ahead of India’s leading mobile service provider, Bharti Airtel.
HutchisonEssar is India’s biggest pure-play cellular
service company with 23 million subscribers.
The average age revenue per user (ARPU) of Hutch at Rs. 374
is way ahead of the industry average revenue per user (ARPU) of Rs. 335.
Hutch is adding close to a million new subscribers every
month. This is growth rate of 5 % on month-to-month basis, making it the
fastest-growing cellular market in the world.
Hutch already has presence in 16 of the 23 telecom circles.
Hutch has a very low penetration level at 12% (less than 2%
in rural India), and as developed telecom market slide into saturation,
India is clearly the geography where most of the long-term potential is
concentrated.
Players in the Race:
Suitor # 1 VODAFONE
The largest mobile company in the world , which closed
fiscal 2006 revenue in excess of £ 29 billion.
Why Hutch-Essar is Important?
A limited presence –just a 3.3 % holding in China Mobile-
coupled with the fact that that most of its other market like UK, Germany
and Australia are saturate, make a presence in the world’s fastest
growing market an imperative.
Suitor # 2 RELIANCE COMMUNICATION
Anil Ambani ,Chairmen Reliance Communications (R-Comm),
told the media recently that the acquisition of Huchison Essar would fit
well with his company’s
existing business.
Why Hutch-Essar is Important?
This will make R-Comm undisputed leader in India, with over
50 mn subscribers. Also by one estimate, it could save $5 billion in capex
and opex over the next five year if Hutch is acquired, as against setting
up a green field pan-India GSM network.
Suitor #3 ESSAR GROUP
Flagship business is steel, refinery, has just started
operations, but an earlier entrant into cellular telephony, with a decade
of experience. Holds 33 % in Hutch Essar-which stood at just 18% a couple
of years age- estimated to be worth roughly $7 bn.
Why Hutch-Essar is Important?
Has a head start with its 33%, but may be holding out to
secure the best valuation for it.
Suitor # 4 THE HINDUJAS
Originally held a 5.11% stake in Hutchison Essar, which
they sold out in mid-2006 for $450 mn.
Why Hutch-Essar is Important?
Looking at expanding in India, and there can’t be more
attractive opportunity than Indian telecom.
Suitor # 5 VERIZON WIRELESS
The US second largest cellular operator uses CDMA
technology and has around 57 million customers has Vodafone as a 44% JV
partner.
Why Hutch-Essar is Important?
Any presence outside a saturated US market is welcome.
BREAKING
NEWS:
Vodafone has successfully bid for Hutchison Essar with a whopping
valuation of $19bn breaking the long suspense as to who would be the
big winner.
Reference:
Businessworld, 15 January, 2007
Businessworld, 8 January, 2007
Business Today, 28 January, 2007
|
