Fitch: Sale of Hutchison Essar stake rare opportunity for foreign investors

Fitch Ratings said the proposed sale of Hutchison Telecommunications International Ltd.'s 67% stake in Hutchison Essar Ltd. has drawn intense interest from international and domestic telecom operators and financial investors. The main contenders are Vodafone Group plc, Reliance Communications Ltd., the Essar Group, Orascom Telecom and the Hinduja Group.

In the agency's view, the strategic value of Hutchison Essar would be most significant to Vodafone and Reliance, both frontrunners in the race for Hutchison Essar. Although Vodafone has an impressive footprint spanning 27 countries, it has limited exposure to Asia, which boasts some of the fastest-growing emerging telecom markets. Not only would Hutchison Essar be a good fit for Vodafone's portfolio, the robust growth in India could also help offset slowing growth in the group's traditional West European markets, Fitch said.

For Reliance, Hutchison Essar is an extremely attractive target from a technology standpoint because Reliance has often expressed a keenness to strengthen its GSM franchise, the agency said. In addition, there are the obvious scale benefits of operational and capital expenditure savings from a potential merger with Hutchison Essar, although this would also entail significant integration challenges.

For all foreign investors, Hutchison Essar represents a high-quality asset and a rare opportunity to own a piece of India's compelling telecom growth story, Fitch said. Given its entrenched presence and well-managed operations, the agency expects Hutchison Essar to be one of the largest beneficiaries of future industry growth in India, which is expected to remain strong in view of the still-low penetration rates.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.