(Associated Press via NewsEdge) Shares in Vodafone Group rose as the market reacted positively to the weekend move by the world's largest mobile telephone company to gain control of Hutchison Essar India.
Buying into a rapidly growing market, Vodafone agreed to pay $11.1 billion for the 67% stake held by Hutchison Telecom International.
The company also said it would make an offer to buy Essar Group's 33 % stake in Hutchison Essar 'at the equivalent price per share' it agreed to with Hutchison Telecom, a holding company of Hong Kong based Hutchison Whampoa.
With European markets fully saturated with mobile telephones, Vodafone sees India as a key area for potential growth. Recently mobile telephone companies there have been adding 6.5 million users per month.
Hutchison Essar is India's fourth-largest operator with about 23.3 million customers and 16.4% of the market.
Vodafone shares rose to close at 151.25 pence ($2.95), up 1.34%, on the London Stock Exchange.
Michael Dunning of Fitch Ratings said Vodafone's proportion of earnings before interest, taxes, depreciation and amortization generated from emerging markets will increase significantly over the next three years.
'Vodafone's portfolio of emerging markets assets is a strong one and will offset slowing growth in its western European markets,' he said.
Other analysts, however, were skeptical.
'Remember the adage, saying you should always sell shares in a company that makes an expensive acquisition,' said a research note from Fortis Private Investment Management.
Bear Stearns rated the acquisition as 'neutral' for Vodafone's share value.
Vodafone, which has a 10% stake in India's Bharti Group, said it has granted the company an option to buy back a 5.6% stake for $1.6 billion. Vodafone said it would retain a 4.4% stake in Bharti.
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