News: Anil Ambani approaches Essar before Hutch bid

(RTR 19/12/2006) Mumbai - Anil Ambani group has approached the Ruias, founders of the Essar group, for their one-third stake in Hutchison-Essar joint venture in India, ahead of a bid for Hutch, the Business Standard said on Tuesday.

The Ruias, who have first right of refusal if Hutchison Telecommunications International decides to exit its Indian mobile operations, were "veering to the view of cashing out," the newspaper said, quoting merchant banking sources.

The Mittals of top mobile services firm Bharti Airtel Ltd. had also "informally sounded out" the Ruias, it said.

Hutchison Essar is 67 per cent-owned by Hong Kong tycoon Li Ka-shing's Hutchison International.

Indian laws mandate that a telecom firm's ownership in another telecom firm will be capped at 10 per cent, or it would have to buy the entire 100 per cent.

A spokesman for the Anil Ambani group declined comment.

Local newspapers have reported that the Anil Ambani group, which controls Reliance Communications Ltd. , the country's second-biggest mobile services firm, was preparing a bid for Hutch with a clutch of private equity funds.

A successful bid would give Reliance Communications the lead in the lucrative Mumbai market and catapult it to the top in the fast-growing Indian market.

Macquarie Securities estimated Hutchison Essar's enterprise value at $13.7 billion with an equity value of $12.18 billion and said a deal would make "strategic sense" for Ambani as it would instantly boost Reliance Communications' GSM operations.

Local media reports at the weekend said the list of potential suitors also included Malaysia's Maxis -- which last year bought 74 percent in India's Aircel, besides Egypt's Orascom Telecom and UK's Vodafone

But local media have crowned Ambani, with some newspapers saying a deal would be sealed by Dec. 28, the birth anniversary of his father Dhirubhai.