The Hindu : Business : Essar buys out BPL Mobile

Online edition of India's National Newspaper
Thursday, Jul 21, 2005

Business

Business

Essar buys out BPL Mobile

Special Correspondent

Deal falls under intra-circle merger and complies with all guidelines

Photo: Bhagya Prakash K.

LOOKING AT BIG PICTURE: The Chairman and Chief Executive Officer of BPL, Rajeev Chandrashekar, interacting with the press in Bangalore on Wednesday.

BANGALORE: The Ruias-promoted Essar group has acquired a controlling stake in BPL Mobile for a consideration of Rs. 4,400 crore, catapulting it into one of the largest pure play cellular operators.

BPL Mobile Chairman and CEO Rajeev Chandrasekhar told reporters here that he and other co-investors had sold 64 per cent stake in the cellular venture to the Essar group.

The deal was finalised after a keenly fought bidding process in which seven to eight foreign players and a few top-notch domestic players participated.

Essar had recently consolidated its position in the joint venture with Hong Kong-based Hutchison, operating in India under the Hutch brand, by acquiring an additional 3.4 per cent equity. The company had also recently approached the Government for securing licences for seven more circles.

BPL Communication owns a 74 per cent stake in BPL Mobile Communications (running mobile services in Mumbai) and 100 per cent in BPL Cellular (operating in Maharashtra and Goa).

Both parties eventually plan to merge BPL Mobile with Hutchison Essar's cellular services after getting necessary approvals. Following the merger, Hutch Essar would become the largest pure play GSM operator with a combined subscriber base of over 11 million spread across 21 circles.

Chandrasekhar said he was looking at the larger picture while selling the controlling stake to the Ruias and "the decision was partly emotional and partly rational.''

"Essar does not have a presence in Maharashtra, Tamil Nadu and Kerala and hence the entire acquisition process fitted in perfectly well. I strongly believe that the decision was in the best interest of the customers,'' he said adding that the deal was not in violation of any norms.

"Though competitors might raise the bogey of the 10 per cent stake factor, this deal falls under the intra-circle merger and complies with all the guidelines stipulated under it,'' he added.

Following the deal, Mr. Chandrasekhar has resigned as CEO of the company.

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