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Vodafone should try to buy the Essar group out of Hutchison Essar, India’s fourth-largest mobile operator, because the Mumbai-based conglomerate has been a “troublesome” partner, according to an Egyptian telecoms entrepreneur.
Naguib Sawiris, whose Orascom Telecom is a minority shareholder in the company that is selling Vodafone a controlling stake in Hutchison Essar, claimed Essar had been a “difficult” partner. Mr Sawiris also said he was disappointed with Hutchison Whampoa, the Hong Kong-based conglomerate that had the decisive say in the sale of the controlling stake in Hutchison Essar.
Hutchison Whampoa and Orascom own 49.7 per and 19.3 per cent respectively of Hutchison Telecommunications International, the company that agreed last week to sell a 67 per cent stake in Hutchison Essar to Vodafone for $11.1bn.
Essar owns the remaining 33 per cent of Hutchison Essar. HTIL and Essar clashed when Orascom bought its stake in HTIL in 2005, because Essar said it had a right of first refusal over any transaction affecting the ownership of Hutchison Essar.
They are also at loggerheads over Essar’s decision last year to drop its planned sale of BPL Mumbai Communications, a mobile operator in India’s financial capital, to Hutchison Essar.
Arun Sarin, Vodafone’s chief executive, said last week the UK group’s preference was for Essar to be its partner, although it would also offer to buy its stake.
In an interview with the Financial Times, Mr Sawiris said: “If I was in his [Mr Sarin’s] position -– he is stuck with them as partners anyhow – if I could have the choice between keeping them or buying them out, I would buy them out.”
Orascom was unhappy at the sale of the 67 per cent stake in Hutchison Essar, partly because the Cairo-based group had ultimately hoped to secure control of HTIL, added Mr Sawiris.
Essar rejected Orascom’s criticism, saying: “Orascom has never been our partner. Hutchison …will remain our partner until the time they sell their shares.” It said Orascom had tried to position itself for a backdoor takeover of Hutchison Essar without reference to Essar.
“Orascom tried to enter through the backdoor by buying this 20 per cent in HTIL and that was done without providing any information to us and without our consent,” added Essar.
Last week, Essar said it had “no intention” of selling its stake in Hutchison Essar, and held talks with Vodafone. Hutchison Whampoa did not return calls seeking comment.
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