Indian Regulators Investigate Vodafone’s Hutchison Essar Purchase

Press Release - March 28, 2007

Indian regulators are investigating Vodafone’s $11 billion purchase of that country’s fourth largest wireless operator, Hutchison Essar, after the Reserve Bank of India complained that the deal violates foreign control laws.

Vodafone agreed to purchase a 67% stake in Hutchison Essar back in mid-February. The remaining 33% is owned by Essar, an Indian investment group, but two thirds of this is controlled via an offshore tax workaround.

This has raised questions about the deal’s compliance India’s foreign ownership laws, which cap foreign investment in a company at 74%.

Earlier this week, Hutchison Telecommunications told the Financial Times that it had cooperated with all rules and regulations in accepting Vodafone’s acquisition offer.