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Hinduja’s to increase stake in Fascel from 30% to 63%. - Views on News from Equitymaster
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  • Apr 17, 2000

    Hinduja’s to increase stake in Fascel from 30% to 63%.

    The Hinduja group is to increase it’s stake in Fascel, the cellular operator for Gujarat from 30% to 63% by acquiring the existing 33% stake held by the Thai Shinwatra group before the end of this month.

    The Hinduja group that is based in UK has interests in oil, petroleum, gas, transport, financial services and a host of other businesses all over the world. The Shinwatra group is similarly one of the largest Thai business groups based in Bangkok.

    The acquisition is being made for a sum of Rs. 1,800 m which is likely to be borrowed from banks or financial institutions. This is because the Hindujas are looking to place this stake with Hutchison Max, the service provider for Mumbai. Were this joint venture to come through, it would give Hutchison Max the largest subscriber base with services in Delhi and Gujarat proposed to be launched. At present Bharti Telecom promoted by the Mittals has the largest subscriber base with services in Delhi, Chennai, Andhra Pradesh and Karnataka.

    The other contenders for the stake are reportedly Bharti Cellular, BPL Mobile and Escotel.

    The present move by the Hindujas is a clever move considering that the competition in the cellular sector is hotting up considerably of late. With the new alliance between AT&T and Tata-Birla in place and a host of the above mentioned players scouting for taking over from existing operators, the Hindujas can place these acquired shares quite soon at a decent premium and also enter into a joint venture with the said acquirer as it can facilitate a synergy of strengths of both. A joint venture shall also enable the company to pitch for licences in other states jointly because of larger financial clout.

    Mobile phone subscription numbers are zooming up because of decline in the price by 30% and size of handsets, reduction in charges on talk time and enhanced facilities such as m-commerce, m-banking and m-internet. So there is a scramble among operators to grab licences for key areas such as Delhi and Gujarat and this alone should ensure the Hindujas a handsome premium on the shares to be acquired by them.

    The other encouraging factor for subscription base is the imminent introduction of calling party pays for incoming calls and also the increase in talk time on account of reduction of tariff on talk time leading to overall increased revenues.

    India already had 1.8 million mobile phone subscribers by the end of February 2000. This figure is expected to double over the next year.



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