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Our Bureau

Chennai , March 7

STERLING Infotech Group and Hutchison Essar today said that they have by mutual consent terminated the agreement under which Hutchison would have acquired Sterling's mobile operations.

In a press release, the Sterling group said the exclusivity period for the preliminary binding agreement between the two ended on November 1, 2004. However, Hutch and Sterling did not terminate the agreement on that date as the Government approval for the acquisition was pending. "However, given the fact that the DoT (Department of Telecom) approval has still not come through, the parties have now terminated the agreement amicably by mutual consent," the release said.

Hutch and the Sterling group signed the agreement in June 2004, under which Hutchison Essar would have acquired the two companies offering cellular services in Chennai and Tamil Nadu circles. The deal was then estimated at Rs 1,600 crore and the two had expected regulatory approvals within 45 days.

In the meantime, in February 2005, it was announced that the Sterling group had signed an agreement with AFK Sistema, a Russian company with interests in fixed and mobile telephone services and insurance, for the Russian company to acquire a 49 per cent stake in Sterling's cellular business for an estimated $450 million (Rs 1,960 crore). AFK Sistema also had an option to increase its stake to 51 per cent.

Informed sources say that the non-binding agreement between the Sterling group and AFK Sistema is valid till March end.

The Sterling group is also preparing to launch its mobile services in new circles in the North and the East for which it had obtained licences. Against the earlier decision to launch the services under the Dishnet brand name, the group now plans to use the Aircel brand name in the new circles.

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