Vodafone targets India

Vodafone is bidding to take over Hutchison Essar in India, giving it access to one the largest, yet still relatively untapped, mobile markets in the world.

The Vodafone board confirmed that it would bid on a controlling interest in Hutchison Essar, India’s fourth largest wireless provider with a 16% market share and valuation of $15 billion. This isn’t Vodafone’s first venture in South Asia. Last year it bought a 10% stake in Bharti Airtel, the country’s largest operator, but since purchasing that stake Vodafone has been re-evaluating the structure of its piecemeal mobile empire, a complex system of minority and majority stakes in global carriers some of which carry the Vodafone name.

Vodafone has recently made moves to shed stakes in companies it does not have direct control over and sell off operations to far from its core European base of operations. In the last year it has sold off its stakes in Swiscomm Mobile and Belgacom and divested itself of its Japanese operations. But in the case of India, it appears to be taking the opposite approach: building a controlling interest in a major operator in a high-growth market.

Vodafone will likely have competition for the prize. Domestic Telecom giant Reliance Communications has also indicated an interest in its smaller competitor, and Indian law would allow the operator to buy the company outright while as a foreign company Vodafone could purchase only a 74% stake in the firm.

Hutchison Essar is now majority owned by Li Ka-shing’s Hutchison group, a Hong Kong-based telecom conglomerate that owns the 3 networks in Europe as well as many wireline and wireless holdings throughout Asia.