Subba’s Serendipitous moments

February 14, 2007

Vodafone — Problems ahead..!

Filed under: Business,India,Model,Strategy — Subbaraman Iyer @ 4:33 pm

I talked about Vodafone paying what I consider a high price for Hutch Essar. An insider from Hutch Essar informs me that the current management (Ruia brothers) are not very happy with Vodafone as the majority shareholder, despite making contrary statements to the media.It also seems that the Essar group had preferred working with the Hindujas group.

I think Vodafone has to contend with some serious management issues — something they may have factored in, but clearly underestimated it. Read the latest story here. The Essar group seems to be in discussion talking to lawyers, bankers and even some key Government officials about some critical issues.

Cross border acquisitions bring their own set of issues. In this case, Vodafone is likely to flex their muscles much more and play the Big Brother. The Essar group and the chieftains don’t have a great track record in managing alliances.

So, stormy days ahead.

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