Merger & Acquisitions: Hutch Is Now Vodafone Presentation Transcript
Case on: the Hutch Essar Acquisition:
Vodafone’s Foray Into An Emerging
Focus on Merger &
• A merger involves the mutual
decision of two companies to
combine and become one entity.Merger
• An acquisition is the purchase of
one company by another in
which no new company is
“Acquisitions are like love marriages.
Every company falls in it, sometime-
Mr. Narayan Murthy, INFOSYS
About Vodafone (Voice Data fone)
Founded in 1983 as Racal Telecom
Group Vodafone plc
Headquarters Berkshire, UK
Key persons Arun Sarin, CEO
Industry Mobile telecommunication
Subscriber Base 198.6 Millions
Operations 25 Countries in Five Continents
Hutchison Essar (HEL)
Operation starts in 1994 In India
Joint Venture HTIL and the Essar
Subscriber base 29.2 million in India
Industry Mobile Telecommunication
Revenue US$ 4 billion
In 2005, HEL become Hutchison Man
Telecom Ltd to enter in IPO
Indian Market scenario of
A large market with significant growth potential
1994, DoT issue licenses to private operators to start mobile service in metro
There are only four major player accept hutch
Sustained economic & telecom market growth
Rural areas are still untouched
FDI limits are increase from 49% to 74%
Govt try to vanished the CDMA services and start the service of GSM
Reason-HTIL Decided To Exit
Indian Telecom Market
TO focus on its existing markets in Europe.
HTIL’s plan to invest in Indian Ports was blocked
Due to falling ARPU.
Expansion in Rural areas to keep pace with
HTIL’s relations with Indian partner, Essar.
Reason-Vodafone Attracted To Buy
Stake In HEL
HEL was company
with 2nd highest
Licenses in almost all
Essar spacetel, to
operate in another 7
circles wide coverage.
High brand recall
for Hutch among
Company use of
Enterprise value of Hutchison Essar is $18.8 billion
Value of 67% stake in Hutch Essar - $11.1 billion
Vodafone is selling 5.6% stake in Bharti for $1.6
Vodafone will retain 4.4% in Bharti as pure
Vodafone and Bharti to share infrastructure
Hutch has 23.3 million subscribers as of Dec
Benefits of Acquisitions
Accelerates Vodafone’s move to a controlling
position in a leading operator in the attractive and
fast growing Indian mobile market .
India is the world’s 2nd most populated country
Use of existing management.
Hutch Essar delivers a strong existing platform in
Circumvent government regulations
The cellular telephony is extremely competitive, and India has one of
the lowest ARPUs in the world.
Its big competitors are home-grown majors, who can manage the
Telecom valuations are at a high and this could mean it is years
Vodafone recovers its multi-billion dollar investment
The Vodafone brand is relatively unknown in the Indian market.
Besides the brand will cost money and take time.