Vodafone faces stiff Indian rivalry

THE COMPETITION for Indian mobile phone company, Hutchison Essar, could not possibly get any worse for Vodafone. There are at least three major competitors.

It doesn't seem like Vodafone - which claims to be the world's leading mobile operator by revenues - bothered to do its homework.

Under local regulations, a foreign company cannot own more than 75 per cent of an Indian telecoms company. So it was always going to need a local partner if it wanted to take a majority position in Hutchison Essar.

The logical choice would have been Essar itself which already owns 33 per cent of the operator. But Essar has already made its own bid to acquire the rest of the company it doesn't already own.

So Essar's Ravi Ruia can't have been working in cahoots with Vodafone's Arun Sarin to help the British operator muscle into the Indian market.

Worse still, Anil Ambani, who already runs India's second largest mobile operator, Reliance Communications, has now said he wants to take over the country's fourth player too - Hutchison Essar.

Ambani reckons he has a queue of private equity companies lining up to help him buy Hutchison Essar, although he didn't say whether that list included the Texas Pacific Group which had been contemplating making a bid.

Why all the fuss? Well, Hutchison Essar might have 'only' 22 million subscribers but the whole country has around 130 million subscribers out of a total population of around 1.3 billion.

The there's also the question of what Vodafone might be forced to do with its 10 per cent stake in Bharti Tele Ventures, India's largest mobile operator. Wouldn't Vodafone have been better off trying to increase its stake in Bharti? µ

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