Ending two months of speculation, Vodafone enters India by buying out Hutch’s stake at $19 billion dollars. The Essars of the world have got a good deal.
In my opinion, Hutch has been over valued; I have a reason to doubt the numbers since the methodology of valuation has not yet been mentioned. Why does this deal make headlines for reasons other than obvious?
It makes sense for Vodafone to buy out an existing telecom network (and it’s infrastructure sourced from European manufacturers) than to upscale a greenfield project from a scratch. In other words, the Hutch subscribers (and that includes me) were sitting ducks for acquisition. Vodafone is very keen on getting their 3G services (marketed under Vodafone Live!) to India. If I am not mistaken, Vodafone’s Arun Sarin was under fire recently for it’s bitter turf wars and under extreme pressure to show up quarterly profits. How does India fit in their radar is beyond my reasoning as of now.
Still, I would oppose the entry of British firms of all hues in Indian telecom industry. Interestingly, Reliance lost out on the bids. It must have been a major setback for Anil Ambani who must now question his well publicised visits to the temples along with his mother. While I don’t doubt his spirituality; I wonder whether it was a wise move to have your pictures splashed trying to please the heavens. That leaves out Reliance out in the cold.
We would wait and watch as to how Vodafone would unfold it’s services here in India.
Interestingly, the Brits are such nuts- they haven’t updated their website (nor the press release) to announce the acquistion of the stake. It only reflects poorly on their work ethics and their professionalism.
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[...] Vodafone’s entry in Indian market has been followed by British Telecom’s entry in the national long distance calling arena. I doubt that with increased “competiton” we would get to see any drastic fall in the prices. Not until we have carrier access codes giving the people a real choice to carry your voice traffic from your preferred operator. [...]