Vodafone, Essar pact soon

Arun Sarin, the chief executive of world's largest mobile telephony operator Vodafone, today wrapped up his three-day trip to New Delhi and Mumbai with a 15-minute meeting with Prime Minister Manmohan Singh and with the hope that a formal agreement of co-operation with the Essar Group would soon be forged.

Sarin emerged from the meeting at the Prime Minister's official residence and told reporters that he had apprised Singh of Vodafone's plans for Hutch-Essar, India fourth largest mobile operator in which it is acquiring 67 per cent of the equity.

He said he was convinced that the Essar group would remain a partner in the mobile phone company, whose 33 per cent equity is held by the Ruias-controlled conglomerate.

"I am going back with a very positive feeling that we are working together. The Essar Group is the founding partner in this venture. I would very much like for them to continue. There is still some work to be done and we will do that in the coming weeks," he said.Sarin is next expected to brief his board of directors about the recent developments, in particular the discussions with the Ruias.

"Once the Board approves of a strategy, the intermediaries will take over the task of finalising the pacts. Sarin will remain hands-on and there is always the phone," said an executive close to the development. That process is expected to begin immediately from next week, even as Vodafone and Hutchison Telecom International move ahead separately to conclude the sale agreement.

The key upshot to Vodafone's India plans was communication minister Dayanidhi Maran's announcement from Barcelona on Thursday, which said the government would soon make it mandatory for telecom infrastructure to be shared.

"The statement puts a stamp of ministerial authority on the Vodafone-Bharti MoU and any objections that Essar may have (to the pact) would not cut much ice anymore," an industry insider said.

However, the Vodafone team, which has gone back to London, left the country with a mixed feeling. While the reception has been ecstatic, they are a bit concerned over how the talks with Essar will pan out.

"The only downside is there is still some tension over Essar blowing hot and cold. Yesterday, they (Ruia's and Sarin) had a great meeting and parted on a positive note. But, Essar's press statement in the evening seems to have opened up things once again", the source said.

The Essar statement said it would take a decision on its position in due course. "We will ensure that all of our shareholder rights, including under our shareholders agreement with Hutchison, are adhered to," it added.