Financial investigation puts Hutch-Essar deal on hold

Mar 30, 2007, 7:47 GMT

New Delhi - Vodafone's acquisition of Hutchison Telecom International's (HTIL) stake in Hutch Essar Ltd (HEL) has been put on hold with the Indian government seeking financing details of HTIL's two Indian minority stakeholders, reports said Friday.

'I have sought more comments from the companies. They have agreed to give us more details. The decision regarding Vodafone's acquisition has been deferred,' said Finance Secretary Ashok, who heads Foreign Investment Promotion Board, after meeting with officials of the three firms.

The Hong Kong-headquartered HTIL holds a 52-per-cent stake in HEL, which is India's fourth-largest cellular company. Its Indian partners hold a combined 15 per cent, while the remaining 33 per cent is held by the Essar group.

Vodafone acquired 67 per cent in HTIL in March, worth 18.8 billion dollars, with Essar holding rest of the equity in a company that is likely to be named as Vodafone Essar.

The foreign investment board is seeking financial details about aquisitions of shares in HTIL's Indian partners.

Complicated shareholding structures raised concerns of a breach of the 74-per-cent foreign investment ceiling prescribed for the telecoms sector.

The board was also awaiting the opinion of law ministry, while it was not clear as to what position the Reserve Bank of India has taken on the issue.