New Delhi: Hong Kong's conglomerate Hutchison Ltd has bought an additional 5.11 per cent stake in its Indian GSM mobile business amounting to at least $550 million, an industry source said on Thursday.
Shares of Hinduja Ltd, which sold the holding in unlisted Hutchison Essar Ltd, closed 26.5 per cent higher at Rs 460.15, outpacing a 6.9 per cent rise on the 30-issue main index.
India's booming wireless sector, the world's fastest growing mobile services market, has seen a spate of mergers and acquisitions over the past two years as soaring growth has attracted overseas carriers and domestic companies.
More than 4 million customers are entering the galloping market each month, lured by the cheapest local mobile call rates in the world of as low as 2 US cents a minute.
"The deal is through. Both have agreed and it is now a matter of documentation," the source close to the transaction told Reuters.
But Hutchison Telecommunications' spokeswoman said it was still work-in-progress.
"This deal has not been finalised, so we cannot comment on market reports," Hutchison Telecommunications' spokeswoman said.
The purchase would take Hutchison Telecommunications International Ltd's direct holding to 47.4 per cent in Hutchison Essar, valuing the Indian firm at $10.76 billion.
Hutchison Essar is India's third-ranked mobile operator by virtue of its 18.06 million GSM customers.
In comparison, top-ranked Bharti Airtel Ltd has 21.86 million GSM customers and second-ranked Reliance Communications Ltd has 21.5 million wireless services customers.
The Hindujas have business interests in trading, automobiles, software development and media.
"Hindujas' exit was expected, it was just a question of when and at what price," said Sheriar Irani, telecoms analyst at ILFS Investmart Ltd.
"At Rs 27,500 per subscriber, the pricing is reasonable," he added.
Hutchison Essar is expected to float a much anticipated Initial Public Offering (IPO) this year, and the purchase helps HTIL to further consolidate its holding in the fast growing company.
India's diversified Essar group, which has interests in shipping and steel, holds 33 percent of Hutchison Essar. Another Indian firm owns more than 19 percent of Hutchison Essar.
"The company now has a less fragmented holding structure," Mumbai-based Irani said.
Valuations of Hutchison Essar have risen dramatically over the past several years as a mobile revolution took root in Asia's third-largest economy.
In March, Kotak Mahindra Bank Ltd sold its 8.3 per cent stake for Rs 10.19 bn to a joint venture owned by entrepreneur Analjit Singh and Asim Ghosh, the chief of Hutchison Essar.
Singh, who has interests in insurance and healthcare, was Hutchison's original partner in India.
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