A Case Analysis

 The name Vodafone comes from “Voice data

fone”
 HQ in Berkshire, England
 World’s leading international mobile
communications group – 29M revenues
 25 countries, 200 mil customers, 36 partner
networks.
 Advanced mobile telecommunications services –
3G, data related services
 Joint venture - 67% stake by HTIL and 33%
owned by Essar
 HTIL – Li Ka-Shing , Essar – Ruia Family
 HTIL – HK Based Telecom Company
 Essar – India based diversified corporation
 4th largest cellular operator in India
 25m customer ,16.4% national market
share
 Vodafone’s Objective
 To venture into the world’s
most lucrative cellular market
 Strengthen its operation worldwide
 To obtain the majority stake of Hutchison

 Hutchison - Essar Objective

 Sell the 67% stake in Hutchison Essar for the
most profitable deal – minimum of $14 B
 Burgeoning rift between Ruias and Li Ka-
Shing
 Li Ka-Shing’s business modus operandi
 Vodafone’s predicament in EU – reaching
saturation
 Impending rivals- Verizon, Rel Comm,
Hinduja and Essar itself.
 Vodafone - Might get
itself heavily
involved in Portugal
Telecom –which is
another emerging
market

 Hutchison – Go to
the next highest
bidder from the pool
of interested Indian
and Foreign
 Tradables Hutch -Essar Vodafone
High (Min: $14
Valuations Bil) High

Percentage Stake High High

Management control High High

Brand Name High High

Operational Aspect
(Technology) Lower High
 Law and regulatory barriers
 Cap on FDI investments by the government of
India put a three month delay

 Institutional barrier
 If Ruias were in good terms with Li Ka-Shing –
negotiations would have been smoother

 Ethno-centric barriers
 British – Asian
▪ Fair, to-the-point, methodical
▪ Prolonging, methodical, hard-to-judge, process
oriented
 Terms Involved
Vodafone   Hutchison - Essar
67% Stake at $11.1 B   Retains its 33% Stake
 Substantial growth opportunities
with a preferred partner -
To be named as Vodafone-Essar   Vodafone

Reached an MOU with Bharti for Liquidity rights between 3rd and 4th
sharing infrastructure – cost  
anniversaries to sell 33% stake for
savings of 1 Billion in next 5 5 Bn
years
Opportunity to introduce
- Value added services and
Will have rights consistent with its
products
shareholders including
Eg : Vodafone live !   proportionate board
- 3G Foray – Use Vodafone’s
representation
experience in Europe –
competitive advantage
Operational Control
Ravi Ruia would be appointed as
Arun Sarin would be appointed as
  chairman of VE
VC