Summary
How is this a good move for Hutchison? What advantages does this pose for Vodafone? And what about Essar?
Analysis
The sale of the Hutchison holdings in Hutchisson-Essar Ltd to Vodafone is right in line with Hutchison's strategy and tactics in all the businesses they play in - get into an emerging area at the ground level, grow the business by making strong, well-funded strategic moves and hiring really good people in that industry, and when the business indicators reach a certain point, cash in. So what is Hutch's gain in all of this? A low initial investment of a few hundred million $ parlayed into $10.9B in a few years, as well as the divestiture of a company that would soon start to require significant infusions of cash for 3G infrastructure.
So what's the deal for Vodafone? Quite simply, a quick entry into the rapidly growing mobile handset market in India, as well as an outlet for some of their very expensive 3G equipment that is already in place as they make the move into the next generation.
As for Essar - $0.9B is no sneezing money, and will fuel their growth in other areas.
