A consortium led by Delhi-based Vavasi group has sent feelers to China Mobile, the world's largest telecom company, for a possible joint bid for Zain Telecom, adding another element of complexity to the battle for the Kuwait-based company that involves India's two state-owned telecom service providers.
Vavasi is also currently in discussions with state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for a majority stake in a special purpose vehicle that is being formed for the bid.
A top source close to the consortium led by the Vavasi group said: "Our talks with BSNL and MTNL are on track, but we don't have any exclusivity contract with them. We are also holding informal discussions with other telecom companies, including China Mobile, in case talks with BSNL and MTNL do not fructify."
The Malaysian group Al Bukhary, is also part of the consortium.
Top BSNL officials said they have kept their options open. "We are still talking to them and will decide whether to be part of the consortium or stay with the deal at all."
The Vavasi group has a four-month exclusive agreement with the Kharafi group, which holds over 32 per cent in Zain Telecom and is looking to exit. The agreement ends on January 2010, according to the source. Kharafi group has committed to give 46 per cent of the stake in Zain to the consortium, after roping in small investors.
The other large investor in Zain is Kuwait Investment Agency which holds 25 per cent and has said it is open to selling too if it gets a good price.
Vavasi's consortium with BSNL and MTNL has been under a cloud after a nine-member joint committee had rejected the proposal in September on grounds that Vavasi made losses, had a negative net worth and followed questionable accounting practices. Despite this, the management of both corporations decided to overturn the decision and wrote a joint letter to Vavasi group on October 3 expressing keenness to participate. The proposal has the endorsement of Communications Minister A Raja.
Zain, with 65 million subscribers, is present in over 24 countries and could be a key acquisition for telecom companies looking at the fast-growing African and West Asian market.
