Agreement with Essar
March 15 2007 - 4:00AM
UK Regulatory
RNS Number:0032T
Vodafone Group Plc
15 March 2007
15 March 2007
VODAFONE AND ESSAR AGREE PARTNERSHIP TERMS
Vodafone and Essar have reached an agreement under which they will work to
continue the growth of Hutchison Essar Limited ("Hutchison Essar"), one of
India's leading mobile operators. This follows Vodafone's announcement on 11
February 2007 that it had agreed to acquire Hutchison Telecommunications
International Limited's ("HTIL") controlling interest in Hutchison Essar, in
which Essar is and will continue to be a 33% shareholder.
The partners have agreed that Hutchison Essar will be renamed Vodafone Essar
and, in due course, that the business will market its products and services
under the Vodafone brand.
With penetration levels of around 13%, both partners believe that there are
substantial growth opportunities in the Indian mobile telecommunications market.
Vodafone is the leading international mobile operator with an extensive range of
products and services, many of which are not currently available in India. Essar
is a major industrial group with a deep understanding of India and the Indian
mobile telecommunications industry. With these complementary strengths Vodafone
and Essar plan to broaden Vodafone Essar's service offering and enable it to
become the leader in the Indian mobile telephony market.
Commenting on the new partnership, Arun Sarin, Chief Executive of Vodafone said:
"I am delighted that Essar and Vodafone have agreed the terms of an ongoing
partnership. Essar has played a key role in transforming this business into a
leading Indian mobile operator. We look forward to leveraging this experience
and working with our partner as the company enters its next phase of growth in
the attractive Indian telecommunications market. We will be bringing the
relevant range of Vodafone products and services to the Indian consumer."
Ravi Ruia, Vice Chairman of Essar, added:
"It is terrific that we are joining with the world's leading international
mobile company. I welcome them as our partner into this successful business
which we will now take forward to the next level. Essar was a founding partner
in Hutchison Essar and played an active role in building the company, including
extending network coverage into several profitable regional markets. By
partnering with Vodafone we expect to create further value in the business."
Under the terms of the partnership, Vodafone will have operational control of
Vodafone Essar and Essar will have rights consistent with its shareholding,
including proportionate Board representation. Ravi Ruia will be appointed by
Vodafone as Chairman of Vodafone Essar and Arun Sarin will be appointed by Essar
as Vice Chairman.
Essar will have certain liquidity rights including, between the third and fourth
anniversaries of completion, and subject to regulatory requirements, an option
to sell its 33% shareholding in Vodafone Essar to Vodafone for US$5 billion or
an option to sell between US$1 billion and US$5 billion worth of Vodafone Essar
shares to Vodafone at an independently appraised fair market trading value.
Vodafone expects to complete the acquisition of HTIL's interest in Hutchison
Essar in the coming weeks.
- ends -
For further information:
Vodafone Group
Investor Relations Media Relations
Telephone: +44 (0) 1635 664 447 Telephone: +44 (0) 1635 664 444
Essar Global
Media Relations
Telephone: Manish Kedia: +91 9819730092 or B Ganesh Pai: +91 9819730225
Or William Clutterbuck, Maitland: +44 20 7379 5151 or +44 7785 292 617
Notes to Editors
About Vodafone
Vodafone is the world's leading international mobile communications group with
operations in 25 countries across five continents and over 200 million
proportionate customers by the end of January 2007, as well as 36 partner
networks. For further information, please visit www.vodafone.com.
About Essar
Essar is one of India's large corporate houses with 20,000 staff and business
interests spanning high growth infrastructure sectors of steel, oil & gas,
power, telecommunications, shipping & logistics and construction. The group has
built a portfolio of assets with expected revenues of US$10 billion in the year
to March 2008.
About Hutchison Essar
Hutchison Essar, which will be renamed Vodafone Essar, is a leading Indian
telecommunications mobile operator with 25 million customers currently,
representing a 16.4% national market share. Hutchison Essar has over 6,000
employees, operates in 16 circles and has licences in an additional six circles.
In the year to 31 December 2005, Hutchison Essar reported revenue of US$1.3
billion, EBITDA of US$415 million, and operating profit of US$313 million. In
the six months to 30 June 2006, Hutchison Essar reported revenue of US$908
million, EBITDA of US$297 million, and operating profit of US$226 million.
Up until January 2006, Hutchison Essar had licences in 13 circles, of which nine
have 900 MHz spectrum. In January 2006, Hutchison Essar acquired BPL Mobile
Cellular Limited, thereby adding three circles, each operating with 900 MHz
spectrum. In October 2006, Hutchison Essar acquired Spacetel, adding six further
licences, with operations planned to be launched during 2007.
The results of Hutchison Essar are prepared in accordance with Hong Kong
Financial Reporting Standards which may differ in material respects from the
accounting principles applied by Vodafone.
Important information
All company data relating to Hutchison Essar is derived from publicly available
information about Hutchison Essar. Financial information for the year to 31
December 2005 and half year to 30 June 2006 has been translated using an
exchange rate of US$1:HK$7.8.
Market data is based on information from the Cellular Operator Association of
India ("COAI") and the Association of Unified Telecom Service Providers of India
("AUSPI").
Other matters
This press release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to
our expectations and plans, strategy, management's objectives and future
performance, including statements relating to expected benefits associated with
the transactions contemplated herein. Forward-looking statements are sometimes,
but not always, identified by their use of a date in the future or such words as
"aims", "plan", "enable", or "expects". By their nature, forward-looking
statements are inherently predictive, speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future.
There are a number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to: regulatory approvals
that may require acceptance of conditions with potential adverse impacts; risk
involving our ability to realise expected benefits associated with the
transactions referred to herein; the impact of legal or other proceedings; and
the risk that, upon completion of the acquisition of the controlling interest in
Hutch Essar, we discover additional information relating to its business leading
to restructuring charges or write-offs or with other negative implications.
In addition to the factors noted above, please refer to documents Vodafone Group
Plc has filed with, or otherwise furnished to, the US Securities and Exchange
Commission (the "SEC") under the US Securities Exchange Act of 1934, including
the Annual Report on Form 20-F for the year ended 31 March 2006 and subsequently
furnished Form 6-Ks (which are available at the SEC's Internet site (http://
www.sec.gov), for additional factors, risks and uncertainties that could cause
actual results and developments to differ materially from the expectations
disclosed or implied within the forward-looking statements made herein. No
assurances can be given that the forward-looking statements in this release will
be realised. All written or oral forward-looking statements attributable to
Vodafone Group Plc, any members of Vodafone Group or persons acting on our
behalf are expressly qualified in their entirety by the factors referred to
above. Vodafone Group Plc does not undertake, and specifically disclaims, any
obligation to update or revise these forward-looking statements, whether as a
result of new information, future developments or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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