Hutch
consolidates operations
Brings mobile biz under single entity
Business
Line, February 5, 2005
THE Hutchison
Essar group has consolidated its mobile interests
under a single entity Hutchison Max Telecom
Ltd in preparation for a domestic initial
public offer later this year.
Although this has happened hot on the heels
of the hike in FDI cap in the telecom sector
two days ago, the consolidation had already
happened a day earlier, on February 1, going
by the announcement made on the Hong Kong
Stock Exchange by Hutchison Telecommunications
International Ltd.
HMTL
will be renamed Hutchison Essar Ltd, said
a statement from the Hutch group today.
"The consolidation has happened under
the earlier policy itself, the current one
being not yet operational; consolidation was
a prerequisite for the IPO which will be scheduled
for May or June," said Mr Vikash Saraf,
CEO of Essar Teleholdings, the holding company
of the Essar group for its telecom investments.
The IPO will consist of fresh issue of shares,
he said. The size of the issue has not yet
been decided, said Mr Saraf.
"All
requisite Government and regulatory approvals,
consent and permissions for effecting the
consolidation have been obtained," said
a news release from the Hutchison Essar group.
Following the IPO, Hutchison Telecommunications
International (HTIL) could emerge as the first
foreign company to get majority ownership
in an Indian telecom services company. Indian
promoters, going by the new policy will have
to own at least 10 per cent stake.
Already, HTIL not only holds 42.34 per cent
stake in HMTL, but also has an additional
indirect interest of approximately 13.86 per
cent in common stock of HMTL.
This is based on HTIL's minority equity interest
in the joint venture entities between the
Kotak Mahindra Group and the HTIL group companies
that, directly or indirectly, hold equity
interests in the relevant mobile telecommunications
operator.
Apart from HTIL, the direct shareholders in
HMTL will be the Essar group with a 26.42
per cent stake, the Kotak Mahindra group (22.97
per cent), the Hinduja group (5.11 per cent)
and Max India (3.16 per cent).
The consolidation has happened through the
shareholders of the five different Hutch operations
in the country transferring all their shares
in their respective companies to HMTL in return
for issue of new shares in the latter.
Hutchison Max will be paying the Essar group
approximately Rs 1,230 crore in shares for
its 49.03 per cent in Hutchison Essar Telecom;
and Rs 490 crore in shares for Essar's 33.5
per cent stake in Hutchison Telecom East.
Altogether Hutchison Max will have paid over
Rs 3,000 crore (over $680 million) worth of
stock to the Essar group, the Kotak Mahindra
group, the Hinduja group and the Max group
for these companies' stakes in individual
operations.
These operations are Hutchison Essar Telecom
Ltd (Delhi); Fascel Ltd (Gujarat); Hutchison
Telecom East Ltd (Kolkata); and Hutchison
Essar South Ltd (Andhra Pradesh, Karnataka,
Chennai, Punjab, UP West and West Bengal).
Hutchison Telecom East in turn is 100 per
cent owner of Aircel Digilink India Ltd (Uttar
Pradesh East, Rajasthan and Haryana).
The new HMTL shares have a par value of Rs
10 each and were issued at a premium of Rs
237.99, according to the HTIL announcement
to the Hong Kong Stock Exchange.
In addition to these transactions, HMTL has
also acquired from seven indirect wholly owned
subsidiaries of HTIL their entire respective
stakes in the operations, also at the same
price, said the announcement.
Hutchison Max has 7.2 million subscribers
in 13 circles in the country.
CORPORATE
HMTL
will be renamed Hutchison Essar Ltd, said
a statement from the Hutch group today.