Why the fight for Hutch?

Due to the lack of any real business news in India, all the newspapers continue to plaster the headlines with day to day updates on the Hutch buyout. The numbers being thrown around for Hutch are hugh – USD 20 billion, justified? Compare the ARPU’s (average revenue per user) between US carriers and Indian carriers:

The merger in 2005 between Sprint and Nextel was around USD 36 billion and was supposed to result in a wireless powerhouse with a strong ARPU. Sprint expects revenue to hit between $41 billion to $42 billion for 2007. The company anticipates reporting $41 billion in revenue for 2006. When the merger was proposed, Nextel’s ARPU was USD 69 (Rs. 3105) while Sprint’s was USD 63 (Rs. 2835), Verizon’s USD 52 (Rs. 2340) and Cingular’s USD 50 (Rs. 2250).

The ARPU numbers for the Indian wireless carriers are much less, even when you talk about the numbers of users in India they are still much less then US carriers. The latest July-September 2006 quarter figure for Airtel’ ARPU is USD 9.73 (Rs. 438) while Hutch’s ARPU is USD 9.33 (Rs 420). You do the math.

Hutch is the brand name of Hutchison Essar, which is a joint venture between the Ruia’s Essar Group and Hutchison Telecom which is a part of Hutchison Whampoa.

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