The Hindu Business Line : Essar calls off BPL Mobile sale to Hutchison

Wrong number
Group decides to unlock better value
Feared having to give up spectrum up to 15 MHz
FIPB nod for Orascom stake in Hutch-Essar delayed plans

Mumbai , Aug. 1

The Essar group on Tuesday called off the proposed sale of BPL Mobile to Hutchison-Essar.

The group cited non-receipt of clearances for merger of the Mumbai circle operations of BPL with that of Hutch-Essar, sources said.

There were also apprehensions that spectrum up to 15 MHz may have to be relinquished upon the merger.

The original deadline under the share purchase agreement was June 30, 2006, but it had been extended by a month, with no approvals in sight, the sources added.

The Essar group is of the opinion that there was no clarity regarding whether and when the Government approvals would be received, with 10 months having elapsed after the original agreement, said sources close to the deal.

Last year, Essar had acquired majority stake in BPL Communications, which was the holding company of BPL Mobile and BPL Cellular, which in turn would be sold to Hutch-Essar, the joint venture between Hutchison Telecom and the Essar group.

BPL Cellular, with operations in Kerala, Tamil Nadu and Maharashtra, was integrated with Hutch-Essar earlier this year, but the Mumbai circle required special permissions because it would be an intra-circle merger.

However, industry circles said that the Essar group had decided it would unlock better value for BPL Mobile, what with several suitors lining up for it, some of the names being Idea Cellular, Spice and Maxis.

The FIPB approval for Orascom's indirect nine plus per cent stake in Hutch-Essar (Orascom had acquired a stake in Hutchison Telecom) came just 10 days back, and had been delaying the intra-circle merger.

Analysts said that there is good reason for the Essar group to unlock better value from not selling to Hutch-Essar.

Recent deals such as the 5.11 per cent stake sale of the Hindujas to Essar in Hutch-Essar were at more than $500 a subscriber.