Essar Teleholdings is planning to part-finance the acquisition of the 30 per cent stake each in the two Hutchison-controlled cellular circles, Mumbai and Kolkata, through debt and internal resources.
Senior Essar Teleholdings executives said the company would be bringing a part of the funds from internal sources, while the remaining money will be raised as debt, for which it will approach banks and institutions. The company is yet to finalise the quantum of debt.
Essar Teleholdings will have to fork out around $35 million (Rs 168 crore) for the stake in Kolkata circle, which has been valued at $140 million. Negotiations are currently on with Hutchison to finalise the consideration for the Mumbai circle stake, the executives said.
According to Arthur Andersen, which has just concluded the valuation of all properties involved in the proposed merger, the Mumbai circle is valued at around $160 million.
Hutchison has more than 3.8 lakh cellular subscribers in Mumbai, and 1.31 lakh users in the Kolkata circle as on December 2001, according to figures available with the Cellular Operators Association of India.
Following the consolidation of Essar and Hutchison cellular properties, Essar Teleholdings' share in the combined entity could be valued at $750 million, company executives claimed. The merged entity with a 1.2 million users, also has a debt of around $300 million.
As per the merger plan, Hutchison Telecom International will hold 49 per cent in the new entity, while Essar Teleholdings will have 37 per cent. The balance will be split between the Hinduja group, and a special purpose vehicle floated by Hutchison and Kotak Mahindra.
The merged entity, which is also planning an initial public offering in the first quarter of 2003, will cover circles including Mumbai, Delhi, Kolkata, Gujarat, Chennai, Andhra Pradesh, Karnataka, Uttar Pradesh (East), Rajasthan, Punjab and Haryana.
