Mumbai, March 5, 2008 WFA/ISA - Global Advertiser Conference 1

Presentation by:•ANKITA BRAHMBHATT- 04•NILESH PATEL-33•RAGINI PATEL-34•RIMPLE PATEL-36•SONAL PATEL-37

Submitted To:-Prof Drashti Shah

Introduction About HutchHWL started mobile business in 1983 in home market of Hong Kong and now serves over 37 million customers.

Hutch telecommunications and data infrastructure support offerings in the areas of mobile telephony (voice and video based multimedia), fibre-optic broadband networks, fixed-line services and radio broadcasting.

In 1992 Hutchison Whampoa and its Indian business partner established a company that in 1994 was awarded a license to provide mobile telecommunications services in Mumbai.

Hutchison Whampoa had acquired interests in six mobile telecommunications operators providing service in 13 of India's 23 licence areas and following the completion of the acquisition of BPL that number increased to 16.

In 2006, it announced the acquisition of a company (Essar Spacetel - A subsidiary of Essar Group) that held licence applications for the seven remaining licence areas.

Hutch Essar was a leading Indian telecommunications mobile operator with :-23.3 million customers at 31 December 2006, -representing a 16.4% national market share.

Continued

Then it also targeted business users and high-end post-paid customers which helped Hutchison Essar to consistently generate a higher ARPU than its competitors.

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Vodafone maintains the 74 percent FDI limit.

Hutchison held 52 per cent, Analjit Singh and Asim Ghoshtogether hold 15 per cent, while Essar holds 33 per cent.

In Essar’s stake, 22 per cent is held abroad (Mauritius) as a foreign investor, and the balance 11 per cent as a domestic investor.

Hutch was often praised for its award winning advertisements which all follow a clean, minimalist look. Its successful ad campaign in 2003 featured a pug named Cheeka following a boy around in unlikely places, with the tagline, “Wherever you go, our network follows”. The simple yet powerful advertisement campaigns won it many admirers.

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TV COMMERCIAL

The name Vodafone comes from Voice data fone, chosen by the company to "reflect the provision of voice and data services over mobile phones.“

Vodafone was formed in 1984 as a subsidiary of Racal Electronics.It was fully demerged from Racal Electronics Plc and became an independent company in September 1991, at which time it changed its name to Vodafone Group.

Vodafone is a mobile network operator with its headquarters in Newbury, Berkshire, England, UK.

It is the largest mobile telecommunications network company in the world by turnover and has a market value of about £75 billion (August 2008).

Vodafone currently has operations in 25 countries and partner networks in a further 42 countries. Make the most of now.

Vodafone

BUSINESS STRATEGIES.

WHY India?

Operator Subscriber base

Bharti Airtel 118,864,031

Reliance Communications 93,795,613

Vodafone Essar 91,401,959

BSNL 62,861,214

Idea Cellular 57,611,872

Tata Teleservices 57,329,449

Aircel 31,023,997

Spice 4,875,913

DOCOMO 3,042,741

All India 525,147,922

Position Of Vodafone Essar in India after acquisition of Hutch (Rank 3rd from 4th )

Vodafone need -

Vodafone wants to expand into the Asian markets. India has 2nd largest market for mobile. It is growing at the rate of 6 million subscribers per month.

Why Take Over

Why Hutch Want to SellMajor Reasons for sell are :

Hutch-Essar : mutual distrust

The right time to quit Indian operations to finance other operations. Li Ka-Shing was the 10th richest man globally in 2006. In the early 1990s, he sold his stake in Star TV to Rupert Murdoch for $825 million.

cont…..

• Hutchison Essar is a leading India telecommunications mobile operator with 25 million customers currently.

• representing a 16.4% national market share.• Hutchison Essar has over 6,000 employees, operates in 16 circles and has

licenses in an additional six circles.• In the year to 31 December 2005, Hutchison Essar reported revenue of

US$1.3 billion, EBITDA of US$415 million, and operating profit of US$313 million.

• In the six months to 30 June 2006, Hutchison Essar reported revenue of US$908 million, EBITDA of US$297 million, and operating profit of US$226

million.

Hutch Hutch Hutch The biggest one is a presence in a market of 143 million subscribers

that's growing at a rate of 5 per cent on a month-on-month basis

Fourth largest mobile operator in India with 24.41 million subscribers

16.41% of the Indian mobile market, present in 16 of 23 circles.

Accounted for 41 per cent of Hutchison Telecommunication International’s revenues

Revenues of $908 million (Rs 4,086 crore) in H1 2006.Operating profits of Rs 1,017 crore.

Contenders in race

• Essar Group

• Anil Ambani-owned Reliance Communications

• The UK-based Vodafone

• Malaysia’s Maxis Communications

• Egyptian Telco Orascom

WHY HUTCH

• Accelerates Vodafone’s move to a controlling position in a leading operator in the attractive and fast growing Indian mobile market

• Hutch Essar delivers a strong existing platform in India• Driving additional value in Hutch Essar• Increases Vodafone’s exposure to high growth emerging

markets

ACQUISITION DETAILS

Enterprise value of Hutchison Essar is $18.8 billion Value of 67% stake in Hutch Essar - $11.1 billion Vodafone is selling 5.6% stake in Bharti for $1.6 billion Vodafone will retain 4.4% in Bharti as pure financial investment Vodafone acquired 10% in Bharti for $1.5 billion in Oct 2005 Vodafone and Bharti to share infrastructure Hutch has 23.3 million subscribers as of Dec 31, 2006 Vodafone is targeting a 20-25 per cent market share by 2012 The mobile market is expected to grow at 40% CAGR till 2012

Valuation

• Average Revenues per User

• It had the highest ARPUs – Rs 374(Avg Rs335)

• perspective of the buyer

• market share • $54.8 billion Vodafone bagged Hutchison Essar, it valued the company at

$18.8 billion or $770 per subscriber

Valuation of Hutch Essar

Value in ($ billion)

Hutch Essar 100% enterprise value: 18.8

Hutch Essar debt: 1.33

Equity Value: 17.47

Value of 67% stake: 11.70

Other Debt: 0.63

Net Value: 11.08

Financing the deal

• least leveraged

• $5 billion from the sale of its Japanese unit

• $1.62 billion cash from its 5.6 per cent stake sale in Bharti. • cash reserves in excess of $3 billion.

• sold its 25 per cent stake in Swisscom Mobile and exited Belgium

FINANCIAL RESULTS(2007)

COUNTRY NETWORK OWNERSHIP MARKET SHARE

RANK

INDIA (V) HUTCH 52% 22.93% 3/9

AUSTRALIA VODAFONE 100% 16.8% 3/4

N.ZEALAND (V)BELL--SOUTH

100% 52.3% 1/2

ITALY (V)OMNITEL 76.86% 31.1% 2/4

TURKEY (V)TELSIM 100% 26% 2/3

YEAR TURNOVER (MILLION POUNDS)

2005 34073

2006 29350

2007 31104

2008 35478

Synergies Claimed

Vodafone gets access to the fastest growing mobile phone market in the world that is expected to touch 500 million subscribers by 2010.

Cellular penetration in rural India is below 2%, but 67% of India’s population lives in rural India

Hutchison-Essar is not just the 4 player, but also one of the better-run companies with higher average revenue per subscribers.

3G is set to take off in India, allowing data and video to ride on cellular networks. Vodafone already offers 3G elsewhere in the world.

India is key to Vodafone strengthening its presence in Asia, a region seen as the big telecom story

Hurdles of the deal

• Telecom Watchdog, a non-governmental group, which alleged breach of foreign direct investment regulations.

• Ministry suggesting appointment of inspectors to investigate the actual ownership of mobile services company Hutchison Essar.

• The Foreign Investment Promotion Board (FIPB) had earlier sought the

views of Law Ministry about Vodafone's proposed acquisition of Hutchison Telecommunication International Ltd's stake in the Indian mobile company.

Motives & Benefits of Acquisitions

– Accelerates Vodafone’s move to a controlling position in a leading operator in the attractive and fast growing Indian mobile market .

– India is the world’s 2nd most populated country with over 1.1 billion inhabitants

– Use of existing management.– Hutch Essar delivers a strong existing platform in India.– Brand– Circumvent government regulations – Emerging market focus– Value-added services: In terms of value-add, Vodafone can plug

Hutch Essar into its global procurement chain, especially in the area of ultra-low-cost handsets.

– 3G foray

Most Advantage of Acquisition

– Accelerated Growth– Enhanced Profitability

• Economies of scale • Operating economies • Synergy

– Diversification of Risk

Legal Procedures

• Permission for merger • Information to the stock exchange • Approval of board of directors • Application in the High Court • Shareholders’ and creditors’ meetings • Sanction by the High Court • Filing of the Court order• Transfer of assets and liabilities • Payment by cash or securities

Challenges The cellular telephony is extremely competitive,and India has one of the

lowest ARPUs in the world. Besides, ARPU growth is slowing.

• It has an uneasy equation with Essar, which is one-third partner in Hutch-Essar. Tht could be a source of problem.

• The Vodafone brand is relatively unknown in the Indian market. Besides the brand will cost money and take time

• Telecom valuations are at a high and this could mean it is years Vodafone recovers its multi-billion dollar investment

• Its big competitors are home-grown majors, who can manage the ‘environment’ better.

Issue

• The showcause notice (SCN) will simply ask Vodafone why it should not be taxed for capital gains in India under Section 163 of the IT Act,” a source close to the development said.

• Section 163 of the Act defines who all may be considered as agents of non-residents for the purpose of tax in India. Contending that the erstwhile Hutchison-Essar was an “agent” of non-resident Hutchison Inter-national; the income tax department has claimed that the Vodafone-Essar deal involved Indian operations and so is liable to be taxed in the country

5 force model

CONCLUSION

• Taken steps to make a positive difference, by supporting recycling campaigns

• Win-win-win situation for shareholders, employees & the environment

• Improved relationships between stakeholders & has helped to ensure future growth

Thank You