The Story of the Cellular Phone Brand Orange

The Making of an Empire

Hutchison had a presence in the cellular market in India since 1995. In December 1999, Hutchison picked up a 49% stake in Delhi-based cellular service provider Sterling Cellular. Since then, another 2% seemed to have been acquired by a Hutchison associate company.⁷ The rest was held by the Essar group, which owned almost the entire stake in Aircell Digilink, the cellular license holder for Haryana, Rajasthan and Eastern UP.

In 1999, when the Essar group approached financial services company GE Capital Services for a loan of Rs 650, crore to pump into its cellular operations, it could manage to get the money only after the loan was guaranteed by its partner, Hutchison.

Analysts felt that Essar had already agreed to take the backseat in the venture. In early 2000, when Business World contacted Asim Ghosh (Ghosh), Managing Director and CEO, Hutchison Max Telecom (India), he refused to comment on whether the Ruias would let Hutchison be the dominant partner in the cellphone services relationship. But an Essar official commented, "Under the arrangement, Essar will not pull out of the telecom ventures for now, but Hutchison will call the shots.

Essar will end up playing only a passive role in the arrangement." Essar officials held that the company had entered into a tacit agreement with Hutchison that Essar would exit from the telecom business in favor of the multinational when these telecom companies would go for an initial public offer (IPO) in the not-too-distant future.

Hutchison would first acquire half of Essar's stake in these companies and then Essar would go to the primary market with an 'offer for sale' to offload the rest of its stake to the general public. That would leave Hutchison as the majority owner of the cellular telephone companies. However, foreign companies weren't allowed to hold more than 49% stake in Indian telecom outfits and Hutchison already owned 49% of Sterling.

The Story of the Cellular Phone Brand Orange - Next Page >>>

7] Government guidelines prevented a foreign operator from owning more than 49% of a telecom company in the
country.

Case Details

Case Code : BSTR002
Themes: Brand Management
Case Length : 8 Pages
Period : 1995-2001
Organization : Hutchison Telecom, BPL
Pub Date : 2001
Teaching Note : Available
Countries : India
Industry : Telecommunications

Free Case Studies

Business Strategy
Finance
HRM
Insurance
IT and Systems
Marketing
Operations
Leadership
More Case Studies >>

Micro Case Studies

Business Environment
Business Ethics
Business Strategy
Human Resource Management
IT and Systems
Marketing
Operations
Micro Case Studies >>

Free Resources

Micro Case Studies
Case Studies
Articles
Interviews
Book Reviews
Glossary
Online Quiz
More Free Resources >>

Case Related Links

Best Selling Case Studies
Business Case Studies
Learning With Case Studies
Cases Used in Textbooks
Prize Winning Case Studies
Business Updates
More Case Studies >>

Case Studies and Management Resources