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Hutchison Essar Limited

Hutchison Essar Limited, with about 13 million* subscribers after the BPL Mobile Cellular Limited acquisition, is one of the most reputed telecom companies in India. Over the years, it has been named the 'Most Respected Telecom Company', the 'Best Mobile Service in the country', and the 'Most Creative and Most Effective Advertiser of the Year'. Hutchison Telecom is a part of the multinational conglomerate - Hutchison Whampoa which has its origins dating back to 1828 in Hong Kong. The Group operates five core businesses in 42 countries across the world, of which, Hutchison Telecom has been one of the pioneers in mobile multimedia communication and spans five continents. The Essar Group is one of India's largest corporate houses with interests spanning the manufacturing and service sectors like Steel, Oil & Gas, Power, Telecom & BPO, Shipping & Logistics and Engineering & Constructions. The Group has an asset base of over Rs 20 billion (US$ 4.4 billion) and employs over 4000 people. Hutch established its presence in India in 1994 by acquiring the cellular license for Mumbai. It now has operations in 13 circles accounting for 70% of India's mobile subscriber base. With the acquisition of BPL Mobile in 2006, Hutch has increased its presence in Maharashtra, Kerala and Tamil Nadu. Hutch House, Peninsula Corporate Park, Ganpatrao Kadam Marg, Lower Parel Maharashtra 400013 Mumbai INDIA

History
[edit]Hutchison

Essar (1992-2007)

In 1992, Hutchison Whampoa and its Indian business partner Max Group, established a company that in 1994 was awarded a licence to provide mobile telecommunications services in Bombay (nowMumbai) and launched commercial services as Hutchison Max in November 1995. In Delhi, Uttar Pradesh (East), Rajasthan and Haryana, Essar Group was the major partner. But later Hutch took the majority stake. By the time of Hutchison Telecom's Initial Public Offering in 2004, Hutchison Whampoa had acquired interests in six mobile telecommunications operators providing service in 13 of India's 23 licence areas and following the completion of the acquisition of BPL Mobile that number increased to 16. In 2006, it announced the acquisition of a company (Essar Spacetel A subsidiary of Essar Group) that held licence applications for the seven remaining licence areas. Initially, the company grew its business in the largest wireless markets in India in cities like Mumbai, Delhi and Kolkata. In these densely populated urban areas it was able to establish a robust network, well known brand and large distribution network all vital to long-term success in India. Then it also targeted business users and high-end post-paid customers which helped Hutchison Essar to consistently generate a higher Average Revenue Per User (ARPU) than its competitors. By adopting this focused growth plan, it was able to establish leading positions in India's largest markets providing the resources to expand its footprint nationwide. In February 2007, Hutchison Telecom announced that it had entered into a binding agreement with a subsidiary of Vodafone Group Plc to sell its 67% direct and indirect equity and loan interests in Hutchison Essar Limited for a total cash consideration (before costs, expenses and interests) of approximately $11.1 billion. Hutch was often praised for its award winning advertisements which all follow a clean, minimalist look. A recurrent theme is that its message "Hi" stands out visibly though it uses only white letters on red background. Another successful ad campaign in 2003 featured a pug named Cheeka following a boy around in unlikely places, with the tagline, "Wherever you go, our network follows." The simple yet powerful advertisement campaigns won it many admirers. Ads featuring the pug were continued by Vodafone even

after rebranding. The brand subsequently introduced ZooZoos which gained even higher popularity than was created by the Pug. Vodafone's creative agency is O&M while Harit Nagpal was the Marketing Director during the various phases of it's brand evolution.

Timeline
1992: Hutchison Whampoa and Max Group establish Hutchison Max 2000: Acquisition of Delhi operations and entry into Calcutta (now Kolkata) and Gujarat markets through Essar acquisition 2001: Won auction for licences to operate GSM services in Karnataka, Andhra Pradesh and Chennai 2003: Acquired AirCel Digilink (ADIL ESSAR Subsidiary) which operated in Rajastan, Uttar Pradesh East and Haryana telecom circles and rebranded it 'Hutch'. 2004: Launched in three additional telecom circles of India namely Punjab, Uttar Pradesh (West) and West Bengal. 2005: Acquired BPL Mobile operations in 3 circles. This left BPL with operations only in Mumbai, where it still operates under the brand 'Loop Mobile'. 2007: Vodafone acquires a 67% stake in Hutchison Essar for $10.7 billion. The company is renamed Vodafone Essar. 'Hutch' is rebranded to 'Vodafone'. 2008: Vodafone acquires the licences in remaining 7 circles and has starts its pending operations in Madhya Pradesh circle, as well as in Orissa, Assam, North East and Bihar. 2011: Vodafone Group buys out its partner Essar from its Indian mobile phone business. It paid $5.46 billion to take Essar out of its 33% stake in the Indian subsidiary. It left Vodafone owning 74% of the Indian business.

Vodafone acquires Essar's Stake


On March 31, 2011, Vodafone Group Plc announced that it would buy an additional 33% stake in its Indian joint venture for $5 billion after partner Essar Groupexercised an option to sell the holding in the mobile-phone operator. The deal will raise Vodafones stake to 75%. Essar will exit the company after it implemented aput option over 22% of the venture. Vodafone exercised its call option to buy an 11% stake.[5] In 2007, Vodafone granted options to Essar that would enable the conglomerate to sell its entire stake for $5bn, or to dispose of part of the 33 per cent shareholding at an independently appraised fair market value. In January 2011, Vodafone objected to Essars plans to place part of its 33% stake in India Securities, a small public company. Vodafone feared the move would give an inflated market value to Vodafone Essar.[6] It had approached the market regulator SEBI and also filed a petition in the Madras High Court. The final shareholding pattern post this deal was not provided by the company as it was not clear whether Vodafone's stake would exceed the 74 per cent FDI limit. Indian laws don't allow foreign companies to own more than 74% in a local mobile-phone operator. Vodafone has assured it will comply with local rules. Vodafone will have to sell that 1% to some Indian entity, or theyll have to consider an initial public offering. Vodafone also said that final settlement is anticipated to be completed by November 2011. The

completion of the deal would be subject to meeting certain conditions which include Reserve Bank of India's permission as well as valuation of the deal.[7]

Vodafone-Hutchison Tax Case


Vodafone was embroiled in a $2.5 billion tax dispute with the Indian Income Tax Department over its purchase of Hutshison Essar Telecom services in April 2007. It was being alleged by the Indian Tax authorities that the transaction involved purchase of assets of an Indian Company, and therefore the transaction, or part thereof was liable to be taxed in India. [8] Vodafone Group Plc. entered India in 2007 through a subsidiary based in the Netherlands, which acquired Hutchison Telecommunications International Ltds (HTIL) Hutchison Telecommunications International Limited stake in Hutchison Essar Ltd (HEL)the joint venture that held and operated telecom licences in India. This Cayman Islands transaction, along with several related agreements, gave Vodafone control over 67% of HEL and extinguished Hong Kong-based Hutchisons rights of control in India, a deal that cost the worlds largest telco $11.2 billion at the time.[9] The crux of the dispute had been whether or not the Indian Income Tax Department has jurisdiction over the transaction. Vodafone had maintained from the outset that it is not liable to pay tax in India, and even if tax were somehow payable, then it should be Hutchison to bear the tax liability. In January 2012, the Indian Supreme Court passed the judgement in favor of Vodafone, saying that the Indian Income tax department had "no jurisdiction" to levy tax on overseas transaction between companies incorporated outside India. [10]

http://en.wikipedia.org/wiki/Hutchison_Essar
Vodafone buys Hutch-Essar for $19.3 bn
BS Reporters / New Delhi/Mumbai February 12, 2007

British telecom giant Vodafone today emerged victorious in the battle for Hutchison Essar Ltd, Indias third-largest private mobile services operator, with an offer that gives the company an enterprise value of about $19.3 billion. Ending the two-month-long drama, the Hutchison Telecommunications International Board met in London today and chose Vodafone over the Anil Ambani-controlled Reliance Communications, the Ruias of Essar and the Hindujas for sale of its 67 per cent stake in Hutchison Essar. Vodafone has paid a price of around $794 per subscriber to clinch the deal. The valuation is in line with the $33 billion market capitalisation of Bharti Airtel, the countrys largest private mobile services operator, and the $22 billion market capitalisation of Reliance Communications, the second largest operator. The acquisition will give Vodafone, which has over 200 million subscribers globally, a strong presence in the fastest growing market for mobile services Hutchison Essar has close to 24 million customers. Vodafone also has a 9.9 per cent stake in Bharti Airtel, which it is now expected to sell. A statement issued by Essar, which already owns 33 per cent in Hutchison Essar, indicated that Vodafone had proposed to partner it in the joint venture. We have been offered by Vodafone to be its partner. We are evaluating our options in the best interests of the group, it said. Vodafone was the first to announce its intention to acquire a controlling stake in Hutch-Essar after HTIL put its stake on the block in December. Arun Sarin, the India-born CEO of the company, had come to India last month to discuss regulatory and other issues with the countrys finance, commerce and telecom ministers. During his visit, Sarin had said he was open to partnering the Ruias because of their stake in Hutchison-Essar. Top Essar functionaries, however, said they would make up their mind in the next two to three weeks. While one option entails continuing as a partner in Hutchison Essar, another option involves invoking the tag along rights under the shareholders agreement, through which it can sell its stake along with Hutchison to the new buyer at the same price. That would make the

Ruias richer by over $6 billion. As foreign shareholding in an Indian telecommunications firm cannot exceed 74 per cent, Vodafone will need to find a new Indian partner in such an eventuality. The third option, of course, is to go to court to enforce the right of first refusal, as reflected in the shareholders agreement, on which there has been a dispute between the two partners. For CDMA player Reliance Communications, however, the failure to grab Hutchison Essar is a major setback, especially as it would have fitted in with Anil Ambanis vision to enter the GSM space. It would have also given it the leading position in the mobile space, pushing it far ahead of Bharti in terms of market share

http://www.business-standard.com/india/news/vodafone-buys-hutch-essar-for-193-bn/274401/
Vodafone Essar started its operations in India in 1994 and is under the Vodafone Group. The company Vodafone Essar Limited has become one of the leading companies in the telecom sector in India due to its high standard of services that it provides to its customers. The company Vodafone Essar has its operations in 16 telecom circles of the country, which covers around 86% of the customer mobile base in India. The company offers both postpaid and prepaid GSM cellular mobile coverage all across India and its hold is especially strong in the metropolitan cities. The company Vodafone Essar Limited provides services like 2G, which are based on 1800Mhz and 900Mhz GSM digital technology. The company Vodafone Essar also offers voice and data services. Vodafone Essar Limited has received many awards over the years such as the Best Mobile Service in India, Most Effective and Most Creative Advertiser of the Year, and Most Respected Telecom Company. The company Vodafone Essar Limited's chairman is Asim Ghosh, vice chairman is Arun Sarin, and non- executive chairman is Ravi Ruia. The Vodafone Essar subscriber bases in the cities of India are:

Kolkata - 1,632,875 Mumbai - 2,989,970 Delhi - 3,002,442 Chennai - 981,996 The company Vodafone Essar Limited plans to spend more than ` 250 crore in launching low price cell phones in India. The company's objective in doing this is to bring in millions of cheap mobile handsets from around the world into the country and then sell them under the Vodafone brand name in order to maximize sales. It is expected that the company Vodafone Essar Limited will price the handsets in the range of ` 666, ` 999, and ` 888. In this way the company expects to attract new customers and thus expand its customer base that stands at 35 million in 2007. Vodafone Essar plans to sell the low price handsets from its 4 lakhs distribution outlets. The company will buy the low cost cell phones from the firm ZTE that is located in China. The Company ZTE will ship more than 10 million low cost cell phones to India that will then be sold by the company Vodafone Essar. Vodafone Essar Company also has plans to expand in the near future and for this it is planning to take a loan overseas of around US$ 500 million. The company Vodafone Essar Limited will use the money to expand the company's network, better its technology, and open more distribution centers. All these measures will help to increase the customer base of the company Vodafone Essar. Vodafone Essar is one of the topmost companies in the telecom sector in India and is well known for the best quality of products and services offered to its customers. And this is the reason that the customer base of the company Vodafone Essar Limited has been increasing at a very rapid pace. The company is planning to launch low price cell phones in the country and also expand its operations. This is sure to help the company Vodafone Essar to grow and prosper even more in the future.

http://business.mapsofindia.com/communications-industry/companies/vodafone.html

Vodafone Essar Ltd


(IT/Telecom/Biotech) Mumbai INDIA

Public Profile

Profile : Vodafone Essar in India is a subsidiary of Vodafone Group Plc and commenced operations in 1994 when its predecessor Hutchison Telecom acquired the cellular license for Mumbai. Vodafone Essar now has operations in 22 circles with over 58.76 million customers*. Over the years, Vodafone Essar, under the Hutch brand, has been named the Most Respected Telecom Company, the Best Mobile Service in the country and the Most Creative and Most Effective Advertiser of the Year. Vodafone is the worlds leading international mobile communications company. It now has operations in 25 countries across 5 continents and 40 partner networks with over 280 million customers worldwide. Vodafone has partnered with the Essar Group as its principal joint venture partner for the Indian market. Essar Global Limited (EGL) is a diversified business group spanning the manufacturing and services sectors of Steel, Energy, Power, Communications, Shipping & Logistics, and Projects. The group has operations and investments in India, Canada, USA, Africa, the Middle East, the Caribbean and South East Asia and employs 30,000 people worldwide. Vodafone Essar Limited Peninsula Corporate Park Ganpatrao Kadam Marg Lower Parel Mumbai - 400013 India T +91 22 6664 5000 F +91 22 6666 1222 or +91 22 6666 1200

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