Vodafone Started Due Diligence For Hutchison Essar

NEW DELHI -(Dow Jones)- UK-based Vodafone Group Chief Executive Officer Arun Sarin Wednesday said that his company has begun due diligence for acquiring Hutchison's 67% stake in Indian mobile phone service provider Hutchison Essar Ltd.

"We have started the process and it will be completed in couple of weeks," Arun Sarin told Dow Jones Newswires.

Sarin said that Vodafone's plan to buy Hutchison Essar made "great economic sense" and was also a way to expand operations in India.

"India is a growing market...India fits very well in our plans," he said.

Asked if finances were in place for buying Hutchison Essar, Sarin said only: "Vodafone is a large company."

He did not elaborate.

He said that Essar could become a "natural partner" if Vodafone is able to acquire a stake in it.

Hutchison Essar is the country's fourth-largest mobile service provider and is 67%-owned by Hutchison Telecommunications International and 33%-owned by the Essar Group.

Of the 67% in HTIL, 52% is held by Hutchison Whampoa. Analjit Singh, chairman of Max India, owns 8.75% and Asim Ghosh, Hutchison Essar's chief executive, and his associates hold 6.25%.

"We are also talking to Analjit Singh and other partners," said Sarin.

Asked if Vodafone had begun talks with Bharti, Sarin said: "There is no reason yet for disengagement, we have not yet completed the process (of bidding for acquiring Hutchison)."

Vodafone currently has a 10% stake in Bharti, but under Indian law, if it buys a stake in Vodafone it will have to dispose of the Bharti holding.

He also said that media reports on the valuation of Hutchison Essar were "speculative." He did not offer any guidance on a price.

Sarin said his meetings with government ministers and officials in India were part of the due diligence process.

"If this transaction happens and it is a large transaction, we want it to go smoothly," he added.

-By P.R. Venkat, Dow Jones Newswires; +91-11-2307 4020; venkat.pr@dowjones.com

-Edited by Alan Soughley

(END) Dow Jones Newswires "

Posted to the site on 10th January 2007