Reliance Communications Lobbies for Bidyahoo writes…Reliance Communications, India’s second-largest mobile phone company, began lobbying the government Thursday for a chance to bid for rival Hutchison Essar, a day after Britian’s Vodafone said it also wanted a controlling stake in the company.
Reliance Communications Ltd. Chairman Anil Ambani met Finance Minister P. Chidambaram and Communications Minister Dayanidhi Maran to discuss the matter, officials in the two ministries said. The officials spoke on condition of anonymity because of the sensitive nature of the issue.
Shares of Reliance Communications rose 4.8 percent to 426.90 rupees in Thursday’s trading on the Bombay Stock Exchange.
Ambani refused to speak to journalists after the talks.
His meetings came after the board of Reliance Communications on Wednesday authorized him to raise funds and “take all necessary steps” for a possible acquisition of Hutchison Essar Ltd., a joint venture between Hong Kong-Based Hutchison Whampoa and India’s Essar Group.
Hutchison and its associates hold 67 percent in the company and want to exit.
On Wednesday, Vodafone Group PLC’s Chief Executive Arun Sarin said the world’s largest mobile phone company hopes to make a formal bid for Hutchison’s controlling stake in the Indian company in early February.
Vodafone emerged a front runner last week after making an approach that reportedly valued all of Hutchison Essar Ltd. at between US$17 billion (euro13 billion) and US$18 billion (euro13 billion), which would make it the biggest-ever corporate takeover in Indian history.
Sarin, who met with top government officials Wednesday, refused to comment on any offer price or details of how the company planned to raise money for the proposed acquisition.
A successful acquisition of Hutchison Essar would help Vodafone gain a strong presence in one of the world’s fastest growing mobile phone markets.
It is also a crucial move for Sarin, who has come under fire from shareholders in recent months for a lackluster performance of Vodafone’s stock and a widespread perception that the company still lacks a credible strategy for further growth.
As of Nov. 30, Hutchison Essar accounted for 16 percent of India’s 143 million mobile and wireless phone connections. India has been adding 4 million or more new connections each month over the past one year.
Sarin told reporters Thursday that his company was to several Indian firms to partner in a possible bid.
India doesn’t allow foreign companies to hold more than 74 percent equity in a telecommunications venture. If the Essar Group, which holds 33 percent stake in Hutchison Essar, also decides to sell its stake, any foreign buyer of the enterprise will have to rope in a local partner.
Sarin declined to name any potential Indian partner.
For Reliance Communications, a successful bid will make it the leader of the country’s booming mobile phone market.
The company has appointed JP Morgan Chase and two other investment banks to scrutinize the books of Hutchison Essar, said the Dow Jones Newswires quoting an unnamed industry source.
Besides Vodafone and Reliance Communications, the London-based Hinduja brothers also have expressed interest. Malaysia’s Maxis Communications Bhd. and Egypt’s Orascom Telecommunications are also reported to be in the race.
