Anil Ambani's Reliance Communications is almost out of the race to acquire Hutch Essar. It will be Vodafone that ends up picking Hutch Essar. As things stand, Vodafone is looking at acquiring a 76% stake. However, the catch is that it wants the balance 24% to be widely distributed among Indian shareholders. That's tricky because government norms specify that a significant partner should hold a 10% stake in the venture. That's something that Vodafone does not want. All this is part of its global strategy of full control.
The other thing that Vodafone wants is remote control over the telecom network. This is again something that is not allowed under Indian rules. It has roped in the European Union trade commissioner Peter Mandelson to talk to Indian commerce minister Kamal Nath. This is quite on the lines of what Nath did during Lakshmi Niwas Mittal's battle to acquire Vodafone Arcelor.
Vodafone CEO Arun Sarin is in Delhi to meet prime minister Manmohan Singh, communications minister Dayanidhi Maran and commerce minister Kamal Nath.
However, though it seems now that Essar is also on the sidelines, it could change the game by going to court. That will be to the benefit of Reliance Communications, Bharti Airtel and Essar. The losers will be Hutchison and Vodafone.
Apart from this, the only problem that Sarin will have to contend with is the entry of the Hinduja family into the race. For them money is not a problem. Also, the next generation Hindujas are very tech savvy. As already mentioned before, the battle could be finalised within the territorial limits of the UK.
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