Investors concerned by Vodafone deal

Shares in Vodafone slipped more than 2% today following a report the firm was mulling a multi-billion pound bid for India's fourth largest mobile phone operator.

The Financial Times said executives at the Newbury-based firm will meet today to discuss whether to offer US$13.5bn (€10.23bn) for Hutchison Essar.

It is thought a bid could be tabled as early as tomorrow to Canning Fok, managing director of Hutchison Whampoa, and Ravi Ruia, vice chairman of Essar.

The move for the Indian mobile operator would be aimed at helping to offset slowing revenue growth in Vodafone's core European markets.

Vodafone announced on Tuesday it had agreed to sell its 25% stake in Switzerland's leading operator Swisscom Mobile for £1.8bn (€2.68bn).

Hutchison Essar has around 18 million customers and is owned by Hutchison Telecom International and shipping, steel and oil group Essar.

Vodafone shares stood 2.25p lower at 143.75p today amid concern the company was set to enter into a bidding war with Mumbai-based Reliance Communications.

Vodafone chief executive Arun Sarin is reported to have said the firm is interested in "selective acquisitions" to broaden its reach outside Europe.

However, a Vodafone spokesman declined to comment today on whether a bid would be made – or was being considered – for Hutchison Essar.

One analyst said a move would be in line with Vodafone’s strategy, but noted foreign ownership restrictions prevented it owning more than 74% of the group.

Last month, Vodafone said adjusted group operating profits increased by 7.5% to £5.1bn (€7.6bn) during the first six months of the year to September 30.

It was helped by a 4% increase in revenues to £15.6bn (€23.3bn) compared with the same period last year, thanks to powerful progress at its Spanish operation.

Mr Sarin said pressures in the competitive European zone – especially in the UK, Germany and Italy – had been offset by a strong performance in the company’s developing markets.

In August, Vodafone lost the title of the world’s largest mobile phone company to China Mobile, although it still boasts greater turnover.