Sarin claims losers tried to derail deal

Vodafone chief executive Arun Sarin on Saturday said his hopes that India’s regulatory bureaucracy had modernised were shaken by last-minute moves to derail his company’s $11-billion takeover of Hutchison Essar.

Mr Sarin called for greater transparency in India’s merger approval process to defeat backroom efforts by vested interests to manipulate the political bureaucracy.

“I really did not expect people—the ‘good and great’ of India—to be calling cabinet secretaries and ministers to say ‘You have to unwind this deal because we want a piece of it’,” Sarin told a conference of Indian business and academic leaders taking place in Silicon Valley this weekend.

He was speaking to hundreds of fellow alumni from the Indian Institutes of Technology. Vodafone edged out some powerful Indian business groups with an $11-billion bid for Hutchison Telecommunications’ majority stake in India’s fourth-biggest mobile firm in January.

It then underwent a three-month regulatory wait, rapid by US or European standards, he noted.

Mr Sarin said he was confident the deal would sail through until the regulatory process in New Delhi entered its final weeks and he became aware of behind-the-scenes lobbying by competitors attempting “to crater the deal”.

“The billionaire losers’ club was trying to unwind the deal,” Mr Sarin said. “What was fascinating was that there was absolutely no transparency in the process.”

What I didn’t count on was that the bureaucracy would kick in with this kind of evil spirit from our competitors who had lost,” the Vodafone chief said at a news conference after his speech.

Despite his criticisms of India’s regulatory environment, Mr Sarin said he was confident throughout the government approval process that political and economic forces at work in the country would allow Vodafone’s bid for Hutchison Essar to prevail.

Before entering the bidding for Hutchison Essar, Mr Sarin said he had spent time with government leaders to gain assurance that Vodafone’s entry into India would be welcomed.

“I was completely confident from a political standpoint that we would have the blessing and air cover to get the deal done,” he told reporters.

Despite the resistance, Vodafone’s bid gained approval in April. Previously known as Hutchison Essar, the Indian company has been renamed Vodafone Essar. Vodafone owns two-thirds while Indian company Essar owns the remaining stake.

Vodafone, the world’s biggest mobile phone operator by subscribers outside China, aims to be the top wireless carrier in India, where the customer base is expected to rise to 500 million in four to five years from around 150 million now.