Mumbai, March 5, 2008 WFA/ISA - Global Advertiser Conference 1

Presentation by:- AMIT SINGHPAVITRA KUMAR CHAURASIASAIM ahmed

Institute of Professional Education & Research

THE HUTCHISON ESSAR ACQUITION:

VODAFONE’S FORAY INTO AN EMERGING MARKET

MERGER

TRANSACTION WHERE TWO FIRMS AGREE TO INTEGRATE THEIR OPERATIONS ON RELATIVELY COEQUAL BASIS BECAUSE THEY

HAVE RESOURCES AND CAPABILITIES THAT TOGETHER MAY CREATE A STRONGER COMPETITIVE ADVANTAGE.

ACQUISITION

A TRANSACTION WHERE ONE FIRM BUYS ANOTHER FIRM WITH THE INTENT OF MORE EFFECTIVELY USING A CORE

COMPETENCE BY MAKING ACQUIRED FIRM A SUSIDIARY WITHIN ITS PORTFOLIO OF BUSINESSES.

Acquisitions & Mergers

Introduction About Hutch ESSAR

HEL was one the fourth biggest player in the Indian telecom sector.

It is the joint venture between HTIL and the ESSAR.

Started its services in 1994 under the brand name ‘Hutch’

In the year 2000, the company introduced ‘Orange’ brand in Mumbai while continued operation in the rest of the country under the brand name of ‘Hutch’.

On February 5 2005 HEL consolidated its business under a single entity called Hutchinson Man Telecom Ltd.

Hutch Essar was a leading Indian telecommunications mobile operator with :•23.3 million customers at 31 December 2006, •representing a 16.4% national market share.

ConTD…

Wherever you go, our network follows”.

The name Vodafone comes from Voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones.“

Vodafone

Vodafone started as Racal Vodafone in 1982.

It was renamed Racal Telecom in 1988.

Racal Telecom was de-merged from Racal Electronics and named the Vodafone Group in 1991.

On 29th June 1999Vodafone completed acquisition of Air touch communications.

On 28th July 2000, it reverted it to former name, Vodafone Group plc.

In 2006, GOI raised the FDI limit in the telecom sector from 49% to 74%.

Indian mobile market grew at a rapid pace.

Indian mobile customer base has been growing at the rate of five to six million every month.

Because of large rural market.

Why India

TYPE LIMITED

FOUNDED 1994 AS HUTCHISON ESSAR

HEADQUARTERS MUMBAI

INDUSTRY MOBILE TELECOMMUNICATION

PRODUCTS MOBILE NETWORKS, TELECOM SERVICES

OWNER Vodafone (67%), ESSAR(33%)

EMPLOYEES Above 10,000

Operator Subscriber base

Bharti Airtel 118,864,031

Reliance Communications 93,795,613

Vodafone Essar 91,401,959

BSNL 62,861,214

Idea Cellular 57,611,872

Tata Teleservices57,329,449

Aircel 31,023,997

Spice 4,875,913

DOCOMO 3,042,741

All India 525,147,922

Position Of Vodafone Essar in India after acquisition of Hutch (Rank 3rd from 4th )

ACQUISITION DETAILS

Enterprise value of Hutchison Essar is $18.8 billion. Value of 67% stake in Hutch Essar - $11.1 billion. Vodafone is selling 5.6% stake in Bharti for $1.6 billion. Vodafone will retain 4.4% in Bharti as pure financial

investment. Vodafone acquired 10% in Bharti for $1.5 billion in Oct

2005. Vodafone and Bharti to share infrastructure.

BRAND IMAGE AND RECOGNITIONGLOBAL PRESENCEPOSITIONED AS A LEADERBETTER SERVICES

FAILED TO ESTABLISH DOMINANT POSITION IN DEVELOPED MARKETS

RISE IN FDI LIMITSECONOMIC GROWTH LEADING TO HIGH INCOME IN INDIAMARKET SIZE OF INDIA (RURAL MARKET)NETWORK SHARING AGREEMENT WITH BHARTI AIRTEL

STIFF COMPETITION FROM LOCAL PLAYERSAIRTEL ENTERING INTO RURAL MARKETAPPROVAL TO RELIANCE FOR GSM SERVICES

Challenges The Major challenge for Vodafone was the Domestic Players

like: Bharti Airtel, Reliance.

The main challenge for Vodafone to expand into Rural Areas.

CONCLUSION

Win-win-win situation for shareholders, employees & the environment.

Improved relationships between stakeholders & has helped to ensure future growth.

Thank You