Vodafone mum on formal bid as battle for Hutch becomes three-way

Vodafone, the world's second-largest mobile phone operator, flatly refused to confirm a formal bid for Hutchison Essar six days after publicly expressing an interest in it, even as unnamed sources within the company claimed its approach to the Indian operator valued it at nearly 18 billion dollars.

Vodafone sources told TOI on Thursday that "media speculation" of a formal bid was "baseless" and the group was still at the preliminary stage in the battle for Hutchison Essar, that is its "board's official confirmation of an interest in the Indian company".

The sources said nothing had changed vis-à-vis Vodafone and Hutchison Essar since last Friday, December 22, when its board had formally given chief executive Arun Sarin carte blanche to push forward the Group's interest in acquiring a substantial stake in Hutchison-Essar because of India's status as the world's fastest growing mobile phone market. The board had said this was in line with Vodafone's strategy to expand in fast-moving markets.

Even as unconfirmed reports from London and Hutchison headquarters Hong Kong said Sarin had dropped in there over the weekend "in connection" with a formal bid, close-mouthed Vodafone sources insisted the company was nowhere near that stage.

Vodafone sources dismissed reports that "people close to the talks" had let the cat out of the bag by leaking news of a formal bid.

Vodafone's denial of a formal bid came amid raging speculation that the battle for Hutchison had become a fiercely-fought three-way bidding war with Hutch's minority shareholder, Essar, pitching in as well with an offer to buy Hutchison Telecom's stake in India's fourth largest mobile operator.

Observers said that on a day of apparent backroom moves and out-of-sight chessboard stratagems, Essar appeared to have put its oar into the hitherto-anticipated straightforward two-way fight for Hutchison Essar between Vodafone and Reliance Communications.

Essar, the joint venture partner in Hutch-Essar with a 33-per-cent stake, is reported to have offered 11 billion dollars to buy out Hutchison's share. Vodafone's furiously-denied offer of 18-billion-dollars is seen to be way above the minimum mark (of 14 billion dollars) set by Hutchison Essar as an acceptable price to sell.

The Financial Times, London, said on Thursday that Vodafone planned to put aside an extra two billion dollars as part of extra costs associated with the deal, in what many market analysts said, was a "luxury, Rolls-Royce sort of buy-out scenario".

The fever-pitch speculation over the battle for Hutch grew more frenzied, meanwhile, with yet another British newspaper claiming that the brothers Ruia, who own and run Essar, had fallen out over the bid for Hutch.

The Times, London, claimed that Essar chairman Shashi Ruia and vice-chairman Ravi Ruia were at loggerheads over whether to sell their one-third stake in Hutch-Essar or play an even bigger hand and acquire Hutchison Telecom's 67-per-cent share.

With Essar reported to have lined up 10 billion dollars in credit from Morgan Stanley and Citibank to buy out Hutch Telecom, Shashi is seen to have won this round of the battle.