New Delhi, Mar 15 (UNI) Telecom major Vodafone today said it has reached an agreement with local partner Essar to secure operational and managerial control over Hutchison Essar, and said the new company would reach the country's top slot in next three years.
''Essar is our natural ally. We will together make this newly made entity bigger and stronger and reach the top slot by 2010,'' Vodafone Chief Executive Officer Arun Sarin told reporters here.
He said the new entity renamed as Vodafone Essar would introduce its brand into the Indian market soon.
Under the terms of partnership, Vodafone will have operational control of Vodafone Essar and Essar will have rights consistent with its shareholding, including proportionate Board represention, Mr Sarin said.
''Essar Chief Ravi Ruia has agreed to hold the chairmanship of the company who will take it to the next level,'' said Mr Sarin, who will take the charge of Vice Chairman of the firm.
Ranbaxy's Analjit Singh, who along with Hutchison Essar Chief Executive Officer Asim Ghosh has 15 per cent of the company, will also be a board member.
Calling it a win-win situation for both the partners, he said Vodafone would accelerate the capital expenditure for the growing Indian market, especially into the largely untapped rural market.
Reacting on the development Telecom Minister Dayanidhi Maran said, ''Its (Vodafone's) entry into the Indian market will bring in more professionalism and value in the telecom sector becuase of its global experience.'' ''They will spur more competition in the Indian market and customers will get more benefits,'' he added.
Vodafone Essar will offer low-cost mobile handsets and innovative services like money transfer service to the fastest growing mobile market in the world.
''This is a signal of the potential of the Indian market to the world,'' Mr Sarin said.
Essar Chief Ravi Ruia said, ''Vodafone will bring all the services to India. I am closely working with Sarin.'' Essar will have certain liquidity rights in the third and fourth years of completion, and subject to regulatory requirements, an option to sell its 33 per cent shareholding in Vodafone Essar to Vodafone for five billion dollars.
It will also have an option to sell between one billion dollars and five billion dollars worth of Vodafone Essar shares to Vodafone at an independently appraised fair market trading value.
The purchase will give Vodafone, the world's largest wireless carrier by sales, more access to India. The company expects to have 100 million subscribers in India and revenues to go up.
Vodafone, the world's biggest mobile operator in terms of subscribers outside China, will pay 11.1 billion for the 67 per cent stake in Hutchison Essar owned by Hong Kong-based Hutchison Telecommunications International Ltd.
The deal, Vodafone's biggest since its record-breaking 231 billion dollar (180 billion-euro) purchase of Germany's Mannesmann in 2000, saw the company again fight off with Reliance Communications, Hinduja and Essar groups.
Vodafone, which as a foreign company is barred by Indian law from owning more than 74 per cent of a local telecoms operator, currently has a 10 per cent stake in Bharti Airtel Ltd, the country's No 1 player.
Vodafone had bought its stake in Bharti for 1.5 billion dollars in 2005 and had been keen to raise it. But Bharti's shareholders -- Chairman Sunil Mittal and Singapore Telecom -- had been reluctant to sell.
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''Essar is our natural ally. We will together make this newly made entity bigger and stronger and reach the top slot by 2010,'' Vodafone Chief Executive Officer Arun Sarin told reporters here.
He said the new entity renamed as Vodafone Essar would introduce its brand into the Indian market soon.
Under the terms of partnership, Vodafone will have operational control of Vodafone Essar and Essar will have rights consistent with its shareholding, including proportionate Board represention, Mr Sarin said.
''Essar Chief Ravi Ruia has agreed to hold the chairmanship of the company who will take it to the next level,'' said Mr Sarin, who will take the charge of Vice Chairman of the firm.
Ranbaxy's Analjit Singh, who along with Hutchison Essar Chief Executive Officer Asim Ghosh has 15 per cent of the company, will also be a board member.
Calling it a win-win situation for both the partners, he said Vodafone would accelerate the capital expenditure for the growing Indian market, especially into the largely untapped rural market.
Reacting on the development Telecom Minister Dayanidhi Maran said, ''Its (Vodafone's) entry into the Indian market will bring in more professionalism and value in the telecom sector becuase of its global experience.'' ''They will spur more competition in the Indian market and customers will get more benefits,'' he added.
Vodafone Essar will offer low-cost mobile handsets and innovative services like money transfer service to the fastest growing mobile market in the world.
''This is a signal of the potential of the Indian market to the world,'' Mr Sarin said.
Essar Chief Ravi Ruia said, ''Vodafone will bring all the services to India. I am closely working with Sarin.'' Essar will have certain liquidity rights in the third and fourth years of completion, and subject to regulatory requirements, an option to sell its 33 per cent shareholding in Vodafone Essar to Vodafone for five billion dollars.
It will also have an option to sell between one billion dollars and five billion dollars worth of Vodafone Essar shares to Vodafone at an independently appraised fair market trading value.
The purchase will give Vodafone, the world's largest wireless carrier by sales, more access to India. The company expects to have 100 million subscribers in India and revenues to go up.
Vodafone, the world's biggest mobile operator in terms of subscribers outside China, will pay 11.1 billion for the 67 per cent stake in Hutchison Essar owned by Hong Kong-based Hutchison Telecommunications International Ltd.
The deal, Vodafone's biggest since its record-breaking 231 billion dollar (180 billion-euro) purchase of Germany's Mannesmann in 2000, saw the company again fight off with Reliance Communications, Hinduja and Essar groups.
Vodafone, which as a foreign company is barred by Indian law from owning more than 74 per cent of a local telecoms operator, currently has a 10 per cent stake in Bharti Airtel Ltd, the country's No 1 player.
Vodafone had bought its stake in Bharti for 1.5 billion dollars in 2005 and had been keen to raise it. But Bharti's shareholders -- Chairman Sunil Mittal and Singapore Telecom -- had been reluctant to sell.
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