Ruias may stay back as Orascom partner

If they decide to exit, the Orascom-Qatar Telecom combine would need to find an Indian partner.

“There are no permanent enemies in business. The Ruias may decide to remain partners in Hutch Essar with Orascom,’’ said a source.

As a matter of fact, there has been speculation that the Ruias may join hands with the Orascom-Qatar Telecom duo to make a bid for HTIL’s 67% stake, thereby becoming a majority shareholder in Hutch Essar. However, this has been vehemently denied by Essar. “Given the fact that Orascom’s security issue is pending with the PMO, the question of a tie-up with the Egyptian company does not arise,’’ said an Essar official.

If this combination decides to go ahead with the deal, it would leave Reliance Communications out in the cold. Moreover, Vodafone will also find it difficult to muscle in, since the Essar-Orascom combination already has a substantial stake in Hutch Essar.

Of course, everything hinges on the final valuation; whether the Ruias buy or sell will depend on what the bidders are willing to pay. “At the right price, everything is up for sale.

There are two clear groups in Essar — one opposing the sale and the other encouraging it. After all, Rs 25,000-crore plus is a big booty for a group which had, till not very long ago, financial institutions knocking at its door for interest repayments on loans,” says a source close to the negotiations.

Another possible reason for the tie-up between Orascom and Qatar Telecom for acquiring Hutch is that India does not consider investments from Qatar as a security threat. Qatar Investment Agency is currently considering an investment of $5 billion in energy-related projects in India. Qatar is also picking up an equity stake in the LNG terminal that had been hived off from the main Dabhol plant for about $100 million. Besides, India has invited Qatar to participate in NTPC’s Kayamkulam project in Kerala and ONGC’s upcoming petrochemical hub at Mangalore.

During his visit to India earlier this month, Orascom Telecom CEO Naguib Sawiris had said the company could bid for a controlling stake in HEL, if it were to get a green signal from the Indian government.

Mr Sawiris had also said Orascom was open to picking up a direct stake in Indian telecom companies, if the Indian government provided clarity over FDI and security-related issues.

“A country that is looking at $300-400 billion investments must not club security with investments . It is a dangerous mix. Our company is not a security hazard to India just because we operate in Pakistan. The fact is that Hutch Essar is managed by Indians. When you have $10-15 billion investment in this country, by virtue of that you become a protector of this country,” Mr Sawiris had said.

For Orascom, the buyout of HTIL’s stake in Hutch Essar will see its subscriber base rise to 75 million (from 52 million currently), and also provide a direct footprint in the world’s fastest-growing telecom market. It will also make it the biggest telecom player in the Indian sub-continent as it already has operations in Pakistan and Bangladesh.