Hutch: To sell or not to sell?

Santa seems to be very kind this year to Hutch-Essar. It has Reliance, Maxis and Orascom putting money in the stockings but Hutch's sale will finally depend on whether Essar decides to sell, reports CNBC-TV18

Some say that come December 28th, Dhirubhai Ambani's birthday, Anil Ambani will announce the Hutch buyout. Others say that his trip to Tirupati is evidence enough that the deal is already done. But it's not that simple. Not atleast till Essar decides whether it's a buyer or a seller.

For now Essar seems to be holding all the cards in the Hutch deal. As 33% stakeholder it has the first right of refusal to any sale by Hutch. So that gives Essar two options. Either buy out Hutch's 67% stake or exit the venture with Hutch.Many industry players believe that Essar may prefer to sell out with Hutch as it has little managerial experience in telecom. Essar's final decision will depend though on what price other bidders are willing to offer for Hutch-Essar.

So till the Ruias don't make up their mind no other contender can strike the deal. That’s because telecom regulations say no telecom company can hold more than a 9.9% stake in a competing telecom venture.

It's for this very reason that the Tata group had to exit Idea cellular, as they are promoters of Tata Teleservices as well. And in the case of BPL Mumbai, Essar directly holds just a 9.9% stake in it. So while Reliance, Maxis, Bharti or Orascom are working with bankers and private equity partners to put in place acquisition funding, none of them can swing the deal unless Essar makes up it's mind