The Hindu Business Line : `Hutch deal, if thru, to top M&A table'

The Hutchison Essar deal, if it happens, will catapult the telecom sector on top of the M&A table in terms of value at $16 billion, which is 35 per cent of the total deals that happened in the country.

According to a report from an India-focussed cross border advisory firm, IndusView, the acquisition of Hutchison Essar will be India's largest merger and acquisition (M&A) deal.

Prior to the announcement of Vodafone and Reliance Communication's interest in Hutchison Essar, the telecom and oil & gas sector companies with M&A deal values of $2.3 billion each jointly led M&A activity closely followed by the information technology & ITeS sector, which emerged as the third most consolidating industry in terms of value at $2 billion.

Telecom in top slot

In terms of volume, IT and ITES continues to lead with 73 deals.

"With an expected bid of at least $14 billion for Hutchison Essar, the total value of M&A deals will touch $45 billion. The acquisition will also give the telecommunication sector top slot in the sectoral ranking of the M&A table with deal value of $16 billion and a share of 35 per cent in the total deal value ($45 billion)," said Mr Rishi Sahai, Board Director, IndusView.

The advisory form also pointed out that if the acquisition of Hutchison Essar goes to Britain's Vodafone Group Plc, it will be the largest cross-border deal involving an overseas firm acquiring a company in India (inbound).

"Second, the acquisition will also swing the balance between inbound and outbound deals (involving Indian companies acquiring companies overseas) in favour of inbound deals at $18 billion vs outbound at $16 billion. In fact, the deal value will be higher than the acquisition of the UK's largest steel company Corus Group Plc, if it ends up with India's Tata Steel Ltd," said a press release.

Other large deals

Other large mobile telecom deals this year included Aditya Birla Group's increase in stake in Idea Cellular after it bought out Tatas 33 per cent stake; and Telekom Malaysia Berhad's acquisition of 49 per cent stake in Spice Telecom.

Missing out

IndusView said that some of the large mobile telecom service providers such as Telefonica SA of Spain, Deutsche Telekom AG of Germany and the French service provider France Telecom are among those missing out on the opportunities that exist in the Indian market, which is growing at more than six million subscribers a month and expected to reach a mobile subscriber base of 348 million by 2010 from the current 143 million.

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