British giant Vodafone and Indian conglomerate Essar group today reached an agreement for jointly running India's fourth largest mobile firm--- Hutch-Essar, which would be rechristened as Vodafone Essar. The two companies said in a joint statement that they have agreed on partnership terms for Hutchison Essar, in which Vodafone is acquiring 67 per cent stake from Hong Kong's Hutchison Telecom International Ltd while Essar would continue to retain its 33 per cent stake.
"The partners have agreed that Hutchison Essar will be renamed Vodafone Essar and in due course the business will market its products and services under the Vodafone brand," it said.
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 as Chairman of Vodafone Essar and Arun Sarin will be Vice Chairman.
Under the partnership terms, Essar will also have an option to sell its 33 per cent stake to Vodafone for five billion dollars between the third and fourth years or an option to sell between one billion dollars and five billion dollars worth of Vodafone Essar shares to Vodafone at an independently appraised fair market trading value.
Sarin arrived here this morning to sign the partnership agreement with Ruias promoted Essar Group.
Commenting on the new partnership, Vodafone CEO Arun Sarin said, "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."
Essar Vice Chairman Ravi Ruia said, "I welcome them as our partner into this successful business, which we will now take forward to the next level...By partnering with Vodafone we expect to create further value in the business."
Vodafone said it expects to complete the acquisition of HTIL's stake in Hutch Essar in the coming weeks.
Earlier last month, Vodafone had clinched a deal to acquire HTIL's stake for 11.1 billion dollars in cash and about two billion dollars in debt assumptions.
