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Sunday, October 17, 2021

Life on Krypton


The Reliance-Vodafone battle for Hutch is exploding. It might get better...
STEVEN PHILIP WARNER | Issue Dated: January 14, 2007
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Life on Krypton Aft er decades of being tied-up by the Licence Raj, the spirit of liberalisation is fi nally seeing India Inc. get a fresh breath of air. And what a gasp it is, for today the world can only stand dumbfounded at the storm that is gathering over the Indian corporate umbrella. You call it the zeal of a furiously growing India Inc. or a renovated style of risk-taking, but itís all happening right here in the land of the Maharajas! And to highlight this truth is the recent Hutchison-Essar stake-buy battle, which is receiving all attention today.

While on one hand there are bigwigs like Reliance Communications Ltd. and Vodafone who have jumped into the bargaining game, on the other there is the Ruias who were written off by experts decades ago and today own 33% stake in the carrier Ė all helping the cause of the total consideration skyrocketing to newer heights! While on one hand, the Ruias have off ered $11 billion for Hutchison Telecommunications International Ltd. (HTIL), therefore valuing the Indian GSM carrier at a splendiferous $16.5 billion, there is the young Ambani who runs Indiaís second largest telecom company and has teamed up with a group of private equity fi rms including the likes of Blackstone Group, Citigroup and Kohlberg Kravis Roberts & Co. to throw in a counterbid for the carrier. It is also more than obvious that it will have to off er a better valuation for the GSM giant considering that this would be in perfect alignment with its GSM expansion strategy.

Currently, while a 33% stake in the company is held by the Ruias, HTILís 67% shareholding includes a 12.3% interest held by Asim Ghosh, Hutchison Essarís Managing Director and Analjit Singh, Chairman of Max India, a leading insurance and healthcare provider. And with a host of players waiting to lay their hands on Hutchison-Essar, HTILís valuation (to which the company agreed to an off er only exceeding $14 billion); will only shoot northwards by the day. So what we see today is just a typical entity of India Inc. in which a 67% stake was purchased way back in 1998 for just Rs 561 crore and the valuation today of the same share is nothing less than a boggling Rs 60,000 crore!

Th e numbers are only indicative of the impressive distance the Indian telecom sector has galloped to in the 21st century, thus emerging as the fastest growing markets on the global front. Yes, what this sector wit ne s s ed post-2003 is nothing short of magic Ė with growth, growth and growth on the lips of operators and consumers alike! Today, with nearly 6 million Indians being added to the telecom base every month, the total is set to reach a remarkable 200 million by 2008. Th is tale is not limited to the telecom sector. Every industry in the Indian corporate landscape is demonstrating what could have least been imagined just half-adecade back and till this happens, India Inc.ís valuation will only receive one expression from one and all Ė wow!
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Issue Dated: Feb 5, 2017