BUSINESS

Vodafone bid reinforces focus on new markets

By BS Reporter in Mumbai
December 23, 2006 03:18 IST

British telecom major Vodafone has reinforced its strategy to switch over to developing markets from developed ones by giving its chief executive Arun Sarin the go-ahead to pursue a cash offer for the country's fourth largest mobile operator Hutchison Essar.

Investment bankers and corporate observers said a couple of factors, including its falling average return on per user in Europe and inability to grab the majority stake in the country's largest telecom player Bharti Airtel, forced it to take this decision.

In a report, JP Morgan said Vodafone needed to raise exposure to high-growth  emerging markets and offset prospective fall in EBITDA in Europe.

Analysts said the foreign company would utilise funds it raised through selling minority interests in Belgian and Swiss operators for the Hutchison Essar deal. It purchased the Turkish operator Telsim at the beginning of the year and recently upped its stake in its Egyptian subsidiary.

"The board of Vodafone continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutch Essar, " Vodafone said in a statement.

India is the world's fastest growing mobile telephone market with nearly six million new users signing up every month.
BS Reporter in Mumbai
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