Vodafone acquired a 67% stake in Hutchison Essar (Hutch) for $11.1 billion, making it the fourth largest telecom deal in 2007. Hutch was the fourth largest mobile operator in India with over 24 million subscribers and a 16% market share. The acquisition provided Vodafone with access to India's rapidly growing telecom market and Hutch's existing spectrum and infrastructure. It aimed to leverage Vodafone's global scale and expertise to expand in India and capture opportunities from the rollout of 3G services. However, Vodafone would also face challenges of competing in a low-ARPU, price-sensitive market and integrating its brand in India.

1. TAKEOVER DEAL OF HUTCH BY VODAFONE
Shailesh Kumar
Moumita Mukherjee
Naveen Trivedi
Virendra Singh Negi

2. VODAFONE
• Vodafone Group plc is a British company, with headquarters in
London.
• Globally Vodafone ranked fifth by revenue and second in the
number of connections close to 320 million as of 2019.
• Owns and operates networks in 25 countries and has partner
networks in over 47 additional countries.
• On 31st August 2018, Vodafone India merged with Idea and was
renamed as Vodafone Idea limited.
• The Vodafone holds 45.1% stake and Aditya birla group holds 26%
and remaining shares will be held by public.

3. HUTCH
• Hutchison Asia Telecommunications Limited, founded in 1985.
• Headquartered in Hong Kong.
• Owned subsidiary of Hutchison Whampoa.
• Hutch Essar was a leading Indian telecommunications mobile
operator.
• 23.3 million customers at 31 December 2006.
• National market share 16.4%.

4. Growth of Hutchison Essar
• 1992: Hutchison whampoa and Max group established Max Group.
• 2000: Acquisition of Delhi operation entered Kolkata and Gujarat
Market through ESSAR Acquisition.
• 2001: Won auction for incense to operates GSM Service In Karnataka,
Andhra Pradesh and Chennai.
• 2003: Acquired AirCel Digilink (ADIL- Essar Subsidiary) Which
operates in Rajasthan, Uttar Pradesh east and Haryana telecom circles
and renamed it under Hutch Brand.

5. • 2004: Launched its three additional telecom circles of India namely
Punjab, Uttar Pradesh and West Bengal.
• 2005: Acquired BPL, another mobile services provider in India
• 2007: Vodafone acquired HTIL stake in Hutchison Essar.
• Vodafone acquired Dishnet Wireless , a service provider in Orissa
and has launched its services in the following circles successfully .

6. Why everyone wants HUTCH
• The biggest one is a presence in a market of 143 million subscribers
that's growing at a mind-boggling rate of 5 per cent on a month-on
month basis, making it the fastest-growing cellular market in the
world. What's more, penetration levels are still low at 12 per cent (less
than 2 per cent in rural India), and as developed telecom markets slide
into saturation, India is clearly the geography where most of the long-
term potential is concentrated.
• Fourth largest mobile operator in India with 24.41 million subscribers
• 16.41% of the Indian mobile market.

7. • Present in 16 of 23 circles. Has license for six others barring Madhya
Pradesh.
• ARPUs at Rs 374 against national average of Rs 335.46.
• Hutch Mumbai ARPU at Rs 609.36, the highest in India, but yet to be
integrated.
• Accounted for 41 per cent of Hutchison Telecommunication
International’s revenues.
• Revenues of Rs 4,086 crore in H1 2006 against Rs 5,800 crore in 2005.
• Operating profits of Rs 1,017 crore, EBITDA margins at 32.7 per cent
in H1 2006.

8. MERGER DETAILS
• The partners have agreed that Hutchison Essar will be renamed
Vodafone Essar
• On February 11, 2007, Vodafone agreed to acquire the controlling
interest of 67% in Hutch-Essar for US$11.1 billion
• Deal size and stake Fourth largest deal of the year 2007 (to date) at
$13.3bn ($11.1bn plus $2bn debt). Hutchison Essar valued at
$18.8bn.

9. • The sale of its interests in India will enable Hutchison Telecom to
become one of Asia’s best capitalized companies.
• The Hutch Essar deal has netted him a neat $8.48 billion.
• As telecom valuations in India started rising, Essar tried to increase
its stake in the joint venture.
• The key players looking to acquire Hutchison Essar were the Essar
Group, Anil Ambani-owned Reliance Communications, the UK-
based Vodafone, and a string of private equity (PE) players.

10. STRATEGY GOAL BEHIND DEAL
• Emerging market focus
• Large players and competition in the market
• To provide superior shareholder returns.
• To leverage global scale and scope, especially in delivering 3G
services.
• To expand market boundaries.
• To build the best global Vodafone team.
• To be a responsible business and manage its impact on society, the
environment and economy.

11. Synergies Claimed
• Vodafone gets access to the fastest growing mobile phone market in
the world that is expected to touch 500 million subscribers by 2010.
• Cellular penetration in rural India is below 2%, but 67% of India’s
population lives in rural India
• Hutchison-Essar is not just the #4 player, but also one of the better
run companies with higher average revenue per subscribers.
• 3G is set to take off in India, allowing data and video to ride on
cellular networks. Vodafone already offers 3G elsewhere in the world.
• India is key to Vodafone strengthening its presence in Asia, a region
seen as the big telecom story.

12. CHALLENGES TO BE FACED
• The cellular telephony is extremely competitive, and India has one of
the lowest ARPUs in the world.
• It has an uneasy equation with Essar, which is one-third partner in
Hutch-Essar.
• The Vodafone brand is relatively unknown in the Indian marke which
will cause the brand to cost money and take time.
• Telecom valuations are at a high and this could mean it is year
Vodafone recovers its multi-billion dollar investment.

13. Benefits of the merger
• 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 with over 1.1 billion
inhabitants.
• India is the fastest growing major mobile market in the world, with
around 6.5 million monthly net adds in the last quarter.
• India benefits from strong economic fundamentals with expected real
GDP growth in high single digits
• Increases Vodafone’s presence in higher growth emerging markets.

14. THANK YOU