Bidding Looms in Battle for Hutchison India

Hong Kong billionaire Li Ka-shing, famed for his market timing, is moving closer to what would be a lucrative exit from his Indian mobile phone joint venture - if he chooses to sell.

Bids for Hutchison Telecommunications controlling stake in Hutchison Essar, which could value the carrier at as much as $20 billion, are expected in coming days, according to media reports.

Hutchison's local partner, the Essar group, as well as UK-based giant Vodafone, No.2 Indian carrier Reliance Communications and the Hinduja group are all mounting bids for India's fourth-largest mobile firm.

"It's time to conclude the deal," said Frederick Tsang, research director at China Everbright in Hong Kong.

"There shouldn't be too many obstacles to slow down the deal. Some people think the ending will be anticlimactic and there will be selling pressure on Hutch Telecom," he added.

Whatever happens, the 78-year-old Li, who is chairman of the firm's ultimate parent, ports-to-retailing conglomerate Hutchison Whampoa., is in a strong position: He can cash out at what analysts say is a rich price, or he can continue to build up the business in the world's fast-growing cellular market.

"They don't need to sell," said Credit Suisse analyst Cusson Leung.

Shares in Hutchison Telecom, which also has operations in Hong Kong, Thailand and elsewhere, have rallied 28% since the start of November on buyout interest in the Indian business, which is its biggest asset. The stock was up 0.63% at HK$19.20 at midday on Friday.

Hutchison Telecom, which is being represented by Li's house bankers, Goldman Sachs, declined comment on the potential sale of its India business on Friday.


The Essar group told Reuters on Thursday that it has lined up funding for a bid to lift its 33% stake in the carrier.

Essar has said it enjoys the right of first refusal in any buyout of Hutchison Telecom's stake, while Hutchison believes that right only applies in the event that the buyer is one of three local rivals, including Reliance, a source has said.

Essar's financial backers include Citigroup, among others.

Essar will "wait and watch" until the initial bids are submitted, the Hindustan Times reported on Friday.

Vodafone, Europe's biggest mobile group, is eager for growth beyond its saturated home market, but has vowed not to overpay in the Hutchison Essar sweepstakes. As a foreign firm, it can own only up to 74% of a local carrier.

Reliance would leapfrog Bharti Airtel to become India's biggest carrier if its bid was successful. It has lined up financing from banks, including ABN AMRO, JPMorgan and Deutsche Bank, among others, for its bid.

The Hinduja group, meanwhile, has teamed with Qatar Telecom to mount a bid for Hutchison Essar, the Wall Street Journal reported this week. The group, which is still conducting due diligence, has asked for an extension of the deadline, the Economic Times newspaper in India said on Friday.

If Li sells, it would be the latest in a long line of well-timed deals, headlined by the $15 billion profit scored by Hutchison Whampoa when it sold its Orange mobile operation to Germany's Mannesmann in 1999.