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Merger & Acquisitions: Hutch Is Now Vodafone
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Merger & Acquisitions: Hutch Is Now Vodafone






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Merger & Acquisitions: Hutch Is Now Vodafone Merger & Acquisitions: Hutch Is Now Vodafone Presentation Transcript

  • Case on: the Hutch Essar Acquisition: Vodafone’s Foray Into An Emerging Market Presented By: Adheesh Agrawal Harshid Rai Sandeep Patel Shipra Thakre Shrutikirti Mishra Vineet Khushalani Focus on Merger & Acquisition
  • • 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 formed. Acquisition “Acquisitions are like love marriages. Every company falls in it, sometime- somewhere” 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
  • Background of 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 Business Consolidated In 2005, HEL become Hutchison Man Telecom Ltd to enter in IPO
  • Indian Market scenario of Telecommunication A large market with significant growth potential 1994, DoT issue licenses to private operators to start mobile service in metro cities 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 by GOI. Due to falling ARPU. Expansion in Rural areas to keep pace with competitors. HTIL’s relations with Indian partner, Essar.
  • Reason-Vodafone Attracted To Buy Stake In HEL HEL was company with 2nd highest ARPU. Licenses in almost all lucrative telecom circles including metros. Essar spacetel, to operate in another 7 circles wide coverage. High brand recall for Hutch among customer. Company use of latest technology.
  • Acquisition Details 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 billion Vodafone will retain 4.4% in Bharti as pure financial investment  Vodafone and Bharti to share infrastructure  Hutch has 23.3 million subscribers as of Dec 31, 2006
  • 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 India. Circumvent government regulations Value-added services Brand 3G foray
  • Challenges 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 ‘environment’ better. 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.