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Hutchison Essar signs agreements to acquire BPL Mumbai, BPL Cellular, Essar Spacetel

27-September-2005
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Hutchison Essar signs agreements to acquire BPL Mumbai, BPL Cellular, Essar Spacetel

Hutchison Essar Ltd has entered into a binding conditional term sheet for the acquisition of BPL Mobile Communications Ltd (‘BPL Mumbai’) and BPL Mobile Cellular Ltd. It also announced that it had entered into a conditional agreement to acquire Essar Spacetel Ltd, a company that has applied for licenses in seven circles not serviced by Hutchison Essar at present.

BPL Mumbai is the second largest mobile telecommunication services operator in India’s financial hub with 1.3 million customers, whilst BPL Cellular operates in three license areas – Maharashtra and Goa, Tamil Nadu and Kerala – and has 1.5 million customers. Hutchison Essar will pay approximately $1.15 billion for these transactions, which includes cash consideration and assumption of debt.

The seven circles where Essar Spacetel has applied for licenses for telecom services are Madhya Pradesh, North East, Himachal Pradesh, Bihar, Orissa, Assam, and Jammu and Kashmir. Hutchison Essar will pay approximately $6 million in cash for the Essar Spacetel acquisition.

When completed, these acquisitions will immediately increase Hutchison Essar’s customer base to more than 12 million, and will leave it poised to become the premier pure play national mobile telecommunication services operator, covering the entire country.

Ravi Ruia, Director, Hutchison Essar and Vice-Chairman of the Essar Group, said, “The consolidation of BPL’s mobile services and Essar Spacetel with Hutchison Essar is another significant step towards making it one of India’s most valuable companies. Hutch and BPL Mobile are among India’s strongest mobile franchises and the synergy that this consolidation will bring is bound to offer high value and help us gain market share in every territory.”

Dennis Lui, Director, Hutchison Essar and CEO, Hutchison Telecommunications International Ltd, said, “These are defining acquisitions for Hutchison Essar. By giving us the ability to complete our nationwide coverage, they have positioned us to capitalise on the tremendous growth opportunities in India.”

“This is a major investment for Hutchison Essar and clearly signals the commitment of its principal shareholders – Hutchison Telecom and Essar Group – to being a major force in shaping the mobile telecommunications scene in India,” added Lui.

The cost of these acquisitions will be funded by a combination of shareholder funding and external bank borrowings of Hutchison Essar. The parties will move to signing definitive agreements in relation to the acquisition of BPL Mumbai and BPL Celluar as soon as practicable. Completion of the acquisition of BPL Mumbai and Essar Spacetel are subject to regulatory approvals and other conditions.

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