Anil Ambani, the Indian telecoms tycoon, on Thursday publicly entered the race for control of Hutchison Essar, saying it made more sense for a domestic company to take over the country’s fourth-largest mobile phone operator than a foreign suitor such as Vodafone.

In his first official comments on the emerging takeover battle, Mr Ambani, chairman of Reliance Communications, India’s second-largest mobile phone group, said a potential combination of his company with Hutch Essar “could create compelling value for all stakeholders”.

“This is clearly demonstrated by visible experience in the telecoms space. In-country consolidation creates the highest synergies and brings the highest macro value to stakeholders,” he told a press conference in Mumbai.

Aside from Vodafone’s offer of at least $17bn, Hutchison Whampoa of Hong Kong, which owns 67 per cent of Hutch Essar, has also received an offer of at least $11bn from Essar, the Indian steel and oil conglomerate that holds a 33 per cent stake in the company.

People familiar with the matter had early on said Reliance, backed by private equity firms, was a contender for Hutch Essar but Thursday’s comments were the first acknowledgement by the company of the proposal.

Yet even as the battle for Hutch Essar heats up, Mr Ambani acknowledged that any deal could not progress until Hutchison and Essar first came to an agreement on the future of the company.

An offer from Essar complicates talks because it has first right of refusal for any bid from an Indian company. This clause does not apply to a bid from a foreign suitor such as Vodafone. However, Vodafone would need an Indian partner because FDI restrictions limit its stake to 74 per cent.

“They have to resolve this between themselves before any third-party can consider a bid,” said Mr Ambani.

Reliance has reportedly secured bank financing and Mr Ambani claims to have “lost count of how many private equity groups have lined up behind us”. But he refused to shed light on how much Reliance would pay for Hutch Essar.

“In a competitive environment, we’re not going to share numbers with anybody,” he said.

For Reliance, the challenge lies in that it must buy all or none of Hutch Essar. According to Indian law, if a telecoms company wants to buy another operator in the same network area, it must buy 100 per cent of the company or just 10 per cent.

Mr Ambani’s comments on Thursday on Hutch Essar came as he announced a $1.5bn investment in the company’s Flag Telecom undersea cable business to expand its network by 43 per cent to 115,000 kilometres.

The expansion will extend India’s largest internet protocol network to new destinations in south-east Asia, Africa, the Mediterranean and the Pacific, including links between Japan, China and the US West Coast, Reliance said.

Customers will include major state-owned telecoms operators in the countries receiving the cable, which will have the capacity to carry 2.5bn simultaneous voice calls.

Dedicating the project to his late father, industrialist Dhirubhai Ambani, Mr Ambani said: “We live in a world that is perpetually short of bandwidth.”

Analysts had expected Mr Ambani and his brother, Mukesh, who now runs a rival part of their father’s former empire after a family feud, to announce major projects yesterday to mark the 74th anniversary of the birth of Dhirubhai, who died in July 2002.

In September, Reliance announced a $400m investment in another undersea cable, Falcon, connecting India with the Middle East.

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