Vodafone'll continue to hold 4.4% indirect stake in Bharti

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In the Hutch- Essar acquisition race, the UK telecom giant Vodafone has emerged as the winner. In reaction to this deal, Bharti 's Chairman Sunil Mittal has congratulated Vodafone on their Hutch acquisition. Bharti will buy 5.6% direct stake from Vodafone for USD 1.6 billion and Vodafone will not have any representation on Bharti's board.

However, Vodafone will continue to hold 4.4% indirect stake in Bharti. Vodafone customers will use Airtel's network when in India. Vodafone will also use Bharti's NLD and ILD business. Vodafone will give 50% inbound roaming traffic to Bharti for three years.

Joint MD Of Bharti Airtel, Rajan Mittal believes that network sharing will help build depth and rural rollout. He also informs that Vodafone will retain 4.4% without any rights or a seat on Bharti board. He further states that price points are defined and he does not see much erosion.

Excerpts from CNBC-TV18's exclusive interview with Rajan Mittal:

 

Q: How does this Vodafone's entry shake up the market for you? Do you think there will be meaningful changes in the market place with the entry of a large global player?

 

A: We always welcome the competition, which is our responsible competition and we have enjoyed a very fruitful year and a half with Vodafone as our partners. And with the network sharing now between the two companies, which has been announced already, this will give us both the depth and the width to go on roll and tend to the rural area and then expand the network. I think from Bharti's point of view, we welcome this.

 

Q: Would it be fair to say that you are looking at Vodafone as a growth ally rather than a cutthroat competitor then?

 

A: We always feel that every respectable competitor is an ally with the markets growing at this pace and everybody needs to collate with each other to grow this market.

 

Q: Bharti has made up its mind in terms of what it wants to do with Vodafone's stake and have you had any conversation with Singtel at all in terms of what they might want to do now?

 

A: No, clearly the 5.61% we have an agreement with them to buy that back and they would retain the 4.4 which is in the indirect stake that they have without any rights in the board seats, that has clearly been agreed upon between the two partners.

 

Q: What about Singtel?

 

A: Nothing on Singtel.

 

Q: What do you think will happen now, do you see any possibility of any kind of further price point erosion in the market with the entry of another aggressive global player or would it be status core in terms of operations between Hutch and its presence in the market?

 

A: I think that Hutch was very fair and a good competitor and I think price points are pretty much defined. I do not think that with large players like Vodafone coming into the entry market, they will only look at a price point. As I said, they are going to be responsible competitors that are going to allow all the players to go and play fairly in the market. I think that prices will hold up.

 

Q: Would you have rather liked to engage Vodafone as a large shareholder in your own company and riding this growth story in India rather than them being on other side now?

 

A: Vodafone, being a large company, has its own strategic needs and I think from that point of view, we have always said that it has been made through certain acquisitions they have done. As long as we play in a fair market place, it is fine with us.

 

Q: Do you foresee any conflict of interest because Vodafone has been part of your company for so long and is now by all effects competitor?

 

A: I do not think so. They were not in the management case in any case, they were only at the board level and now they will not be on the board levels also. So I do not think that there will be any conflict there.