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The chief executive of Hutchison International Telecommunications (HTIL) said on Wednesday the group’s tussle with its joint venture partner in India over an acquisition could postpone the company’s plans to spin-off its business in the country.
Dennis Lui said he was confident Essar would agree to sell BPL Mumbai, a mobile operation in India’s commercial capital, to Hutchison Essar, a joint venture between the two companies, by the end of this year.
But he said the delay in closing the transaction from a July 31 deadline was one of the factors that could lead to a potential deferral of an initial public offering.
“We still hope to do an IPO this year but we won’t push it. Our time is tight,” Mr Lui said after HTIL announced its first-half results on Wednesday.
Essar, one of India’s largest conglomerates, has helped HTIL, controlled by Hong Kong tycoon Li Ka-shing, to expand its business in India over the past years. However, speculation has been growing that their relationship is turning shaky.
Hutchison Essar – 67 per cent owned by HTIL and 33 per cent by Essar – last year agreed to buy BPL Mumbai from Essar after weeks of difficult negotiations.
However, this month Essar terminated the agreement, saying Hutchison Essar has not received all the necessary government approvals before July 31.
HTIL, which focuses on mobile operations in emerging markets, said on Wednesday the deal has been cleared by India’s telecoms regulator.
The partners have taken the dispute to a Mumbai court and are now waiting for an arbitration.
Mr Lui said on Wednesday its relationship with Essar was good. But he added that HTIL has the rights to make final decisions for Hutchison Essar.
“We are the largest shareholder with management control. But, of course, no company wants to see diverse opinion over its partners. We hope we could sort out our differences,” Mr Lui said.
HTIL’s performance in India has been growing rapidly. In the six months to June 2006, HTIL’s turnover in the country rose 50.9 per cent to HK$7.09bn (US$911m) after subscriber numbers more than doubled to 17.5m.
The results helped HTIL to report its first interim profit since listing in 2004.
HTIL earned HK$644m in the first half of this year, compared with a loss of HK$220 in the same period last year.
HTIL has been planning to sell 10 to 25 per cent of its Indian business since 2004. But its plan has been delayed by India’s foreign direct investment regulations.