Essar calls BPL Mobile for Rs 4,400 cr

Chandrasekhar had been approached by several leading Indian and international investors, including Vodafone, Airtel and Idea Cellular, and had been in discussions with them over the last few months for a complete sellout. With a dispute with his father-in-law T.P.G. Nambiar now out of the way, Chandrasekhar expedited his deal with Essar.

‘‘This agreement marks the final milestone of a process that was initiated earlier this year by us and sets the tone for the creation of the largest pureplay cellular operator in India under Hutch Essar,’’ said an Essar statement.

Both companies want to merge BPL Mobile with Hutchison Essar’s cellular services after the necessary approvals. With this, Hutch Essar will become a strong competitor to the two large cellular operations of Reliance and Airtel and become the largest pureplay GSM operator in the country with a combined subscriber base of over 11 million across 21 circles.

With this acquisition, Hutch will now have a subscriber base of 11.06 million, followed by BSNL at 10.23 million. Bharti Cellular, which occupies the top slot, has a subscriber base of 12.25 million.

‘‘The BPL Mobile franchise has been built over the last 10 years with a lot of passion, commitment and effort and enjoys the unstinting and unparalleled trust of millions of subscribers,’’ said Chandrasekhar.

However, after selling out BPL, he will not get into the cellular phone sector. ‘‘There is an agreement of sorts that I will not remain a player in the cellular phone industry but I am evaluating my options to invest in the telecom industry,’’ Chandrasekhar told The Indian Express.

‘‘Though the leading competitors might raise the bogey of the 10 per cent stake factor, this deal falls under the intra-circle merger and all the stipulated guidelines have been complied with,’’ Chandrasekhar said.

According to the norms, a player operating in a circle cannot hold more than 10 per cent stake in another player in the circle. However, intra-circle mergers are allowed, but the deal will have to be cleared by the Department of Telecommunications.

Chandrasekhar said Essar would be buying 67 per cent stake directly, while the remaining would be bought over from other shareholders, both foreign and domestic investors. Nimesh Kampani, Chairman JM Morgan Stanley, who brokered the deal, said, ‘‘This agreement marks a landmark transaction in the Indian M&A space and it’s one of the largest acquisitions in India.’’

The deal follows Essar’s recent consolidation of its position in its joint venture with Hong Kong-based Hutchison, operating in India under the Hutch brand, by acquiring an additional 3.4 per cent equity. Essar also recently approached the government for getting licences for seven more circles.

BPL Mobile posted a 39 per cent rise in revenue at Rs 1,012 crore and a 35 per cent increase in operating profit at Rs 406 crore for fiscal 2004-05.