Hutchison gains foothold in India, HONG KONG STANDARD
December 20, 1999, Monday
TYCOON Li Ka-shing has extended his telecommunications empire to India with Hutchison Telecommunications purchasing 49 per cent of the equity shares in Sterling Cellular, a duopolistic cellular services provider in the Indian capital Delhi.
Hutchison has responded quickly to tap into the growing Indian market after the March decision by the government to further open up its telecommunications sector for private investment. Hutchison will buy the shares in Sterling from Swisscom and several other foreign shareholders, it said. Essar Teleholdings will retain its 51- per-cent controlling stake in Sterling after the share purchase. 'Hutchison and Essar will jointly explore new opportunities for investment in the telecommunications sector in India,' the companies said in a joint statement. The total consideration of the deal was not disclosed in the statement, but some market analysts estimated that to be almost HK$1 billion.
Sterling is one of the two licensees offering cellular services in Delhi and has about 120,000 subscribers. It expects to expand its market rapidly with the introduction of revenue-sharing licence fees under a Calling Party Pays regime for cellular services.
Essar is one of the India's major business groups with investments in the telecom, steel, oil and power sectors. Hutchison Telecommunications is part of Hutchison Whampoa Group, controlled by Mr Li. 'Our group is a leading cellular-service provider with a long-term commitment to India,' said Canning Fok, group managing director of Hutchison Whampoa. Ravi Rula, vice-chairman of the Essar Group, said: 'We are happy to partner with Hutchison, which has demonstrated a unique ability to bring in high-quality, low-cost telecom services in a short time in many parts of the world.' India is expected to be one of the largest telecommunication markets in the world. It has a total population of nearly 1 billion and some time in the next century it is expected to overtake China as the most populous country in the world. Development of fixed-line telephones in the country has been slow, so some people see mobile communications as a way of leapfrogging old technology and catching up with the rest of the world.
In mid-November, Hutchison Whampoa started a US$1.2 billion (HK$9.36 billion) joint venture with Global Crossing of the US to explore fixed-line telecommunications and Internet opportunities in the Greater China region. That followed the HK$133 billion acquisition of Orange, a British mobile phone network, by Germany's Mannesmann. Under the deal, Hutchison Whampoa will hold a 10-per-cent interest in the German firm. |
