Vodafone had set itself a one-year deadline if Essar tied up the company in courts, Sarin told FE on the sidelines. If legal squabbles extended beyond that, Vodafone would walk out of the deal. “Any transaction of this nature always has time-ups. No transaction is for an indefinite period,” Sarin explained.
Always in charge, he cut short Hutchison Essar managing director Asim Ghosh’s suggestion to re-arrange the seating so that he could be seated along one of the flanks of the 20-ft long table. Sarin preferred to sit at the head, instead. “It’s easier to see all the faces from here,” he reasoned.
His announcement that Ghosh was his choice to head Vodafone-owned Hutchison Essar had a significant caveat: “Provided Asim promises he would make Vodafone India’s largest mobile operator.” Sarin’s goal for Ghosh? Grow Vodafone’s subscriber base in India from 24.41 million to 35 million within a year and to 100 million thereafter. That would make India the largest market for Vodafone, ahead of Germany’s 30 million.
Vodafone would invest $2 billion over two years to expand the Hutch Essar network to rural areas. In comparison, largest mobile operator Bharti Airtel and second largest Reliance Communications have both announced a capex of $2.5 billion each in 2007-08 alone.
On Essar’s threat to sue Vodafone, Sarin said, “We have only announced our intent. It’s an MoU with Bharti to share infrastructure. It’ll occur over the coming months. After the transaction, we’ll have an agreement. It will take months and will be fully vetted by the management and the board.”
He said the ‘tag along’ rights for Essar to sell its 33% stake to Vodafone were based on flexible timing and could extend by roughly a month. Yet, he ruled out paying a higher price for Essar’s stake.
He also clarified that though the Hutch brand would replaced, Vodafone had extended rights to use the brand as per its agreement with Hutchison.
Now it’s time for Act 2 in Mumbai, where Sarin meets the Ruias of Essar on Thursday.
‘I’m sending roses to Essar’
Refusing to accept that announcing the sharing of Hutch Essar’s infrastructure with Bharti without consulting 33% partner Essar was a tactical mistake, Sarin said, “Today is Valentine’s day. I’m sending roses to Essar. I’ll send olive branches. I’m going to visit them (the Ruias). Suggest anything else I could do. We’re fully consultative. Give us 24 hours to develop a relationship that will last a lifetime.”
On Tuesday, Essar had threatened legal action against Vodafone for entering into a memorandum of understanding with Bharti Airtel to share Hutchison Essar’s infrastructure without being consulted.
If anyone thought sending roses to the Ruias signalled a mellowed stance, they were mistaken. Sarin reiterated that Essar had no first right of refusal over HTIL’s 52% stake in Hutch Essar. “Our lawyers’ view is that with respect to Vodafone, Essar has no right of first refusal,” he responded.