Hutchison’s long-drawn consolidation process has finally taken shape, creaing one of the largest mobile operators in the country with a footprint spanning 13 circles and a cellular subscriber base of 7.43 million. On February 1, 2005, Hutchison Telecommunications International Limited (HTIL), the holding company for Hutchison’s operations in Asia including India, achieved consolidation of its operations in the country, managed through four indirect subsidiaries, into a single holding entity through share-swap agreements.
In all, six share-purchase agreements were signed, converting the shares of the equity holders in four erstwhile subsidiaries ?? Hutchison Essar Telecom Limited (HETL), Hutchison Telecom East Limited (HTEL), Fascel and Hutchison Max Telecom Limited (HMTL) ?? into shares of the new consolidated entity, HMTL. Accordingly, the Essar Group ?? the largest stakeholder in HMTL after HTIL ?? transferred its 49.03 per cent interest in HETL and 33.52 per cent interest in HTEL for a combined 20.23 per cent stake in HMTL. Similarly, Kotak Mahindra’s Usha Martin Telematics, which had a 33.9 per cent stake in HTEL and 21 per cent stake in Fascel, has been allotted a 9.42 per cent interest in the new HMTL. IndusInd has been allotted a 5.11 per cent stake in HMTL for its 30 per cent stake in Fascel while Kotak Mahindra’s Jaykay Finholding (India) Private Limited has been given a 0.59 per cent stake for its 2.01 per cent equity in HETL.
HMTL also acquired from the seven indirect wholly owned subsidiaries of HTIL their entire respective stakes in HETL, Hutchison Essar South Limited (HESL), HTEL and Fascel. This included an aggregate of HTIL’s 48.96 per cent in HETL, 32.58 per cent in HTEL, 49 per cent in Fascel and 49 per cent in HESL for the issue of a total of 113.373 million new shares in HMTL. The new shares, with a face value of Rs 10 each, have been issued at a premium of Rs 237.99.
In the new consolidated entity, HTIL is the largest shareholder with a direct 42.34 per cent stake (it also holds an “additional economic interest” of 13.86 per cent based on its minority equity interests in joint venture entities between Kotak Mahindra and HTIL group companies).HTIL is followed by Essar with a 26.42 per cent stake (Essar previously held 19.6 per cent in HMTL), Kotak Mahindra with a 22.97 per cent stake (which previously held 41 per cent in HMTL), IndusInd Telecom Network with a 5.11 per cent stake and Max India with a 3.16 per cent stake in return for its 10 per stake in the erstwhile HMTL.
Post-consolidation, HMTL, with its operations in Mumbai, has become the holding company of HTIL in India.HTEL (Kolkata), HETL (Delhi), HESL (Chennai, Andhra Pradesh, Karnataka, Punjab, Uttar Pradesh ?? West, West Bengal), Fascel (Gujarat) and Aircel Digilink (Rajasthan, Haryana, Uttar Pradesh ?? East) have become wholly owned subsidiaries of HMTL.
According to the company, a single, multi-circle, merged corporate entity would facilitate more efficient management of its operations, more effective use of resources and funds between the operating companies and HMTL, and could be a leverage factor for accessing the debt and equity markets. The consolidated HMTL has been valued at more than Rs 85 billion as on the date of its consolidation.
Hutchison indicated that it intends to list itself on the bourses by June 30, 2005.While there is nothing definite on how much equity the company would offload, some reports say that the IPO would dilute 10 per cent of the equity and the shares would be listed on the Bombay Stock Exchange. Some companies holding equity stock in HMTL are looking to the IPO as an option to liquidate their assets. Recently, IndusInd Telecom indicated that financial and strategic investors were showing interest in buying out its holding in HMTL. There is also speculation that HMTL will soon be renamed Hutchison-Essar.
