Hutchison Whampoa for sale

The battle for Hutchison Essar has taken a completely new twist. Hong-Kong based Hutchison Whampoa Group is believed to be considering a sale of its telecom business, including its lucrative India operation.

According to the news Hutchison Group is getting out of its Telecom business by selling its stake in all the telecom companies it owns. If this happens this will be the largest sale in the telecom industry.

The Hutchison-Essar, the fourth largest mobile operator in India, is valued at $11 billion. In this the Hutchison’s stake is valued at around $ 8 billion. Private equity firms like Texas Pacific and Blackstone group are looking for the sale of Hutchison’s stake in its telecom buiness.

It is believed that Anil Ambani group Reliance Communication is in the race to acquire the stake of Hutchison’s stake in Hutchison Essar along with Blackstone. If this deal comes through this will give Reliance communication a good GSM network which it was going to start. Reliance may be looking for inorganic growth which will save its time in establishing the GSM network from scratch. This may be one of the reasons that Reliance is eyeing in Hutchison Essar.

But Reliance may face regulatory problem. TRAI does not allow two companies (owned by the same operator i.e; stake is more than 10% in each company) to operate in the same circle. Hutch has presence in many areas where Reliance operates. So it may be a hurdle for Anil Ambani in acquiring the stake in Hutchison- Essar stake. Tata had to sale its stake in Idea due to this regulatory problem.

Another option can be Essar (it has 33% stake in the joint venture Hutchison-Essar) buying the remaining stake of Hutch is Hutchison-Essar. Both this groups are not having good relationships for last few months. These disputes arise after the acquisition of BPL by the Essar group, which was then sold to the Hutchison-Essar group.

Source: Business Standard