European telecom major France Telecom (Orange SA) has exited India by selling its 26% holding in BPL Mobile Communications Ltd to the Essar Group and a consortium of financial investors - Asian Pacific Systems Ltd - for an undisclosed amount.
While the Essar Group has acquired 9.9% of this holding through its telecom arm Essar Teleholdings Ltd (ETHL), the balance 16.1% has been sold to Asian Pacific Systems Ltd.
A BPL Mobile company statement said France Telecom had recently exited similar investments in other countries in Asia, namely Thailand and Indonesia. France Telecom owns the Orange brandname worldwide.
When contacted, ETHL CEO Vikash Saraf declined to comment on the valuation, and said the decision to acquire the stake was merely a financial investment. The intra-circle regulations prevent one service provider from picking up more than 10% in another provider in the same circle. This explains the decision to pick up a 9.9% stake by ETHL, since it partners Hutchison in Mumbai to provide services under the Orange brandname.
It needs to be mentioned that ETHL has acquired the 9.9% stake in BPL Mobile on its own and not through Hutchison Essar Ltd - its proposed merged entity with Hutchison. The approval from the Foreign Investment Promotion Board (FIPB) has already come in and it is gathered that this merged entity is looking to hit the markets with an initial public offering (IPO) sometime next year.
The deal gains significance in the light of Mumbai being BPL’s most important circle as far as its cellular operations are concerned. BPL Mobile Communications provides cellular services in the Mumbai metro circle and has a subscriber base of 13.5 lakh. While France Telecom had a 26% stake, the holding company BPL Communications owns the balance 74% stake.
Interestingly, BPL’s other cellular venture - BPL Cellular - witnessed the exit of AT&T Wireless earlier this year when it sold its 49% holding in BPL Cellular to the Indian promoters. BPL Cellular provides services in Maharashtra, Tamil Nadu and Kerala.
BPL’s cellular operations are split between BPL Mobile and BPL Cellular which between themselves control the four circles. Overall, the subscriber base across these four circles stands at 23 lakh. While the promoters - BPL Communications - hold a 60% stake, the balance 40% stake is split between foreign investors which include Actis (formerly CDC) and AIG.
BPL had announced, in October this year, that it was looking to infuse fresh equity for its cellular operations by bringing in a strategic partner. Investment banker JM Morgan Stanley has been given the mandate for this exercise apart from working out other options.