Talk like an Egyptian says Orascom Telecom to Indians
Orascom of Egypt controls upto 65% of Pakistan’s and 8% of Bangladesh’s cell phone market. It paid USD 1.3 Billion to buy 19.3% stake in HTIL – Hutchinson Telecom International Limited. HTIL is a subsidary of Hutschinson Whampoa group. HTIL operates with various Indian partners with Essar being the major Indian partner in Hutchinson Essar. With this deal, Orascom gets to indirectly hold 8% in Hutchinson Esaar which has 13 Million subscribers. Orascom will also get one board members seat on Hutchinson Essar. Orascom also has the right to increase its stake in HTIL and thus subsequently raise stake in Hutchinson Essar to 10%.
Lets take a closer look at Hutch – Orascom USD 1.3 Billion deal.
80% of HTIL’s subscribers are from Hutchinson Essar join venture. Hutschinson controls 42% of the venture while Essar Teleholdings control 33% and the balance divided between various Indian operators like Fascel, Kotak and BPL after they voluntarily merged their operations into the Hutch Essar venture.
Looking at what Maxis paid for Aircel acquistion, this deal appears to be very very expensive. Sure Hutch-Essar is a national operator, has higher growth rate and footprints in all the major circles and licenses for 6 more through the acquistion of Essar Spacetel. Orascom’s 8% stake will translate to 1.04 Million subscribers directly under its control for which it has paid Rs4,600 crores, which in-turn translates to paying Rs44,230/subscriber(USD950). Considering this deal, Maxis got a cake walk deal, presence in Tamil nadu and an entry into the world’s fastest growing telecom market.
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[...] Hutchinson which is in a major clean-up operation before its proposed IPO offered to buy Hindujas 5.11% stake in Hutch @ Rs2025 crores($450 Million). At the current offer price Hutch is valued at $9.0 Billion. At the end of March-2006, Hutch had a subscriber base of 90 Lakhs(9 Million) which translates to Rs45,000/subscriber, precisely the same amount which Egyptian Telecom major, Orascom paid to Huthch’s promoter, Hutchinson Whampoa group in January 2006. Hindujas valuation of Hutch is at the higher end, $12 Billion, which translates into Rs60,000/subscriber. [...]
[...] ET reports that Egyptian Telecom giant, Orascom Telecom Holdings is in talks with Hutchison Telecommunications International Limited (HTIL) to take control of HTIL. Late last year, Orascom bought 19.3% stake in HTIL, giving it an indirect stake of 10% in Hutchison India and a board reprsesntation as well. This move by HTIL, without taking their Indian partner, Essar TeleHoldings into complete confidence is the main cause for the ongoing rift between Essar and HTIL. It is reliably learnt that Essar will spare no efforts this time to lobby against any such moves by HTIL to sell out to Orascom. Essar will play the National Security card in the corridors of Delhi because Orascom controls one of Pakistan’s largest cellular company, Mobilink. [...]