The board of Vodafone continues to believe the mobile market in India has great potential and is therefore considering the acquisition of a controlling interest in Hutch Essar.
Such a transaction would be consistent with its stated strategy of seeking selective acquisition opportunities in developing markets.
The process is at an early stage and may or may not lead to a transaction.
A further announcement will be made in due course.
Updated at 1320 hrs: The board of directors of telecom giant Vodafone has mandated chief executive Arun Sarin to pursue a cash offer for India's fourth-largest mobile firm Hutchison-Essar, a British media report said today.
"Vodafone's board has given its chief executive Arun Sarin the go-ahead to pursue a cash offer for Hutchison-Essar, which would value India's fourth mobile operator at up to $13.5 billion (7 billion pound)," The Daily Telegraph said.
The daily also said that any bid is believed to be dependent on whether Vodafone manages to convince Bharti Airtel, India's largest mobile operator where it already has 10% stake, to waive a one-year non-compete clause.
Vodafone's 10% stake in Bharti Airtel is worth around 1.4 billion pounds, it said.
"An announcement on whether Vodafone will proceed with efforts to buy out Hutchison Essar's 67% shareholder Hutchison Whampoa of Hong Kong could come as early as this morning," the report said without citing any source.
The report said Vodafone has been trying to get an agreement in principle from Bharti Airtel's larger shareholders, Bharti Telecom and Singapore Telecom, to drop the non-competition clause for a penalty fee.
Besides Vodafone, Reliance Communications and Malaysia's Maxis are reported to be interested in acquiring Hutch-Essar. However, none of them have acknowledged that they would like to bid for Hutch-Essar nor has there been any formal bid by any of the players.
Meanwhile, the board of directors of Hutchison Essar met in Mumbai on Friday, but the meeting was a routine one unrelated to any potential bid for the company.
Updated on 21/1206 at 1145 hrs: British telecom giant Vodafone's board met today but apparently did not reach a decision on whether to bid for India's fourth-largest mobile player Hutch-Essar, estimated to be valued at up to $17 billion.
The board was looking at all the options, including valuation of the venture, but sources familiar with the developments indicated that some members felt it was very high.
Asked if the board deferred a decision on bidding for Hutch-Essar, Bobby Leach, group media relations director for the Vodafone Group Plc said: "I am afraid, I cannot comment anything at this point. I don't know why you think the board has decided anything at this point."
With the news that Vodafone could be a contender for the venture, the race for acquisition has hotted but there was no announcement by any of the possible contenders, including Reliance Communications, Malaysia's Maxis and Eqypt's Orascom, on submitting their bids.
Hong Kong-based Hutchison Telecom International has 67% stake in the joint venture, while India's Essar has the remaining 33%.
Updated at 1900 hrs: Vodafone may talk soon on Hutch-Essar bid
British telecom company Vodafone is likely to make its position clear on reported plans to buy Indian telecom joint venture Hutch-Essar.
While a spokesperson for Vodafone was silent on whether the company's board met today, sources said it was likely to issue a statement sooner or later.
Leading British newspapers had reported that Vodafone's board would meet today to consider a takeover bid of more than $13.5 billion for Hutchison-Essar.
Meanwhile, Vodafone's shares slipped nearly 2% on the London Stock Exchange. The shares of Vodafone fell to 143.25 pence in early trades today as against 146 pence at the close of trading yesterday.
Updated at 1700 hrs: Vodafone mulls $13.5bn move for Hutch-Essar
The board of British telecom giant Vodafone is meeting today to consider a takeover bid of more than $13.5 billion for India's fourth-largest mobile operator Hutchison-Essar, media reports said here.
"Vodafone's Board is set to meet on Thursday to consider a proposed $13.5 billion-plus offer for Hutchison Essar," a report in Financial Times said.
"Vodafone executives plan to table an offer in person on Friday to Canning Fok, MD of Hutchison Whampoa and Ravi Ruia, vice-chairman of Essar, who are both scheduled to be in London," it said.
The bid from Vodafone, the world's largest mobile operator in terms of revenue, would probably trigger a counter attack from Reliance Communications (RCL). The Anil Ambani group firm, being the second largest telecom player in the country, would be able to exploit big synergies with Hutchison, the UK papers said.
Vodafone and Reliance are serious about Hutch Essar, and there may be plenty of others to come, the FT report said, quoting an unnamed banker familiar to the situation.
However, Sunil Mittal, chairman of Bharti Enterprises and founder of Bharti Airtel, the market leader in India, has refused an invitation from Vodafone to undertake a joint bid for Hutchison Essar, the newspaper said.
Bankers told Financial Times that Mittal feared losing control of the main cash-cow of his rapidly diversifying group. The group, which generates most of its revenues from telecom services, has diversified into other areas such as retail.
RCL was monitoring developments but had not decided to make a formal bid, reports said. It is believed to have teamed up with four equity houses, including Blackstone. However, some reports said RCL and Blackstone have asked Citigroup and UBS to raise $15 billion to fund their bid.
