Top Story

Home >> Digital >> Article

Essar acquires BPL Comm for Rs 5,200 cr

21-July-2005
Font Size   16
Essar acquires BPL Comm for Rs 5,200 cr

Chandrasekhar exits telecom; BPL Comm to be merged with Hutch Essar.

In the largest consolidation move in the Indian telecom sector, the Essar Group will acquire BPL Communications in a deal valued at nearly Rs 5,200 crore.

The amount includes the Rs 2,600 crore debt of the company. Essar will pay the balance to Rajeev Chandrasekhar for his 66 per cent holding in the company and other shareholders who hold 34 per cent.

BPL Communications owns 74 per cent stake in BPL Mobile Communications (operations in Mumbai) and 100 per cent in BPL Mobile Cellular (operations in Maharashtra and Goa, Tamil Nadu and Pondicherry and Kerala.)

Chandrasekhar, the former chairman and CEO of BPL Communications, signed the agreement today for selling his 66 per cent stake. The agreement with other shareholders would be struck soon, Essar sources said. Essar already holds 9 per cent stake in BPL Mobile.

Prashant Ruia, director of the Essar Group, told Business Standard that the company intended to merge BPL Mobile with Hutchison-Essar, the existing joint venture between Hutchison Whampoa and the Essar Group, after getting all necessary approvals. He said the Essar Group would fund the acquisition through internal accruals.

Ruia said the acquisition would not violate the department of telecommunications regulations which did not allow a telecom operator to have more than 10 per cent stake in firms operating in the same circle (Hutchison and BPL both operate in Mumbai).

Though he did not want to elaborate on this at this stage, sources close to the deal said a special purpose vehicle (SPV) could be created in association with two investors who would also chip in money to fund the acquisition. The SPV will maintain a distance from Essar to comply with the rules. It is, however, not clear how this will operate.

After the merger, the combined market share of the new entity in the Mumbai market would be over 55 per cent, he said. The combined entity will have a total subscriber base of 11 million across 21 circles and will be the largest GSM operator in the country.

It will have total revenues of close to Rs 4,500 crore with BPL Communications coming in with Rs 1,100 crore.

The BPL Mobile brand will continue to exist during the transition period and will eventually switch to Orange or Hutch as the case may be. BPL Communications was advised on this deal by JM Morgan Stanley.

On his part, Chandrasekhar will step down from BPL Mobile and will pursue other ventures.

He, however, declined to reveal how much the 64 per cent will fetch him and his investors.

Explaining his decision to sell and exit from the telecom venture, Chandrasekhar said: “It is part rational and part emotional. Leaving BPL Mobile was and is not an easy decision. However keeping the emotional tugs aside it was important I take the best decision for the franchise along with our customer and 1000 plus employees. I strongly believe that the decision to be acquired by Essar and eventually Hutch Essar is the best for our customers and team members of BPL Mobile. This more than anything else helped me decide in favour of Essar.”

The decision also marks the end of BPL Group's foray into a number of diverse sectors ranging from telecom to power, which ultimately led to the group bleeding heavily and accumulating a total debt of Rs 1,400 crore.

Added Ravi Ruia, vice-chairman, Essar Group: “This agreement will give us the ability to increase our presence in the country and add muscle to Hutchison Essar's presence. Our aim is to become the leading telephony services provider in the region. This and the Essar Group's other plans in the telecom sector will give us a pan India footprint.

Tags

Varun Raina, Marketing Manager, Airbnb India speaks to exchange4media about the successful #LiveThere campaign and how Bollywood helps them connect with its young consumer

Tim Castree is all praises for his team in India and trusts it to be a result of “an excellent execution of agency’s global strategy” headed by Kartik Sharma

Siddharth Dabhade says Criteo’s technology allows brands to engage with shoppers, create relevant experience on retail apps, thereby driving sales and profits

Shantanu Gangane says OTT platform Viu plans around 20+ originals and is all set to enter the Tamil market with a mix of syndicated and original content

right
left
OFF THE CUFF HAS JOURNALIST ARUN SHOURIE IN CONVERSATION WITH SHEKHAR GUPTA IN MUMBAI IAA HOSTS FIRST INDIAA REGIONAL AWARDS (TELUGU) IN HYDERABAD BREAK THE CEILING TOUCH THE SKY 2018 SEES OVERWHELMING INDUSTRY PARTICIPATION 10TH EDITION OF ABC EUREKA AWARDS IN MUMBAI CELEBRATES WORK OF PARTNER AGENCIES EMINENT JURY PICKS LOUDEST’S 100 MOST POWERFUL INDIAN MUSIC BUSINESS LEADERS MODE LOFT BY SABGROUP LAUNCHES SIGNATURE MENSWEAR POWER DRESSING CLOTHING LINE TOP MARKETERS DISCUSS ART AND SCIENCE OF EFFECTIVE LISTENING @PITCH CMO SUMMIT 2018, DELHI THIRD SEASON OF ‘INDIA’S TOP DIGITAL PLANNERS’ RECOGNIZES EXCELLENCE IN THE DIGITAL INDUSTRY WOMEN ECONOMIC FORUM 2018 SEES DISTINGUISHED GLOBAL PERSONALITIES IN ATTENDANCE PEPPER CREATIVE AWARDS 2018 RECOGNIZE THE BEST IN ADVERTISING IN SOUTH INDIA RADIO CITY’S POWER OF RADIO MEET HOSTS TOP ADVERTISING INDUSTRY LEADERS TOP INDUSTRY PERSONALITIES ATTEND ZOOM-MYNTRA EVENING TO CELEBRATE THEIR PARTNERSHIP LEADING MARKETERS, EXPERTS SHARE INSIGHTS ON DIGITAL TRANSFORMATION @ADOBE SYMPOSIUM IN MUMBAI NICKELODEON TRADE PARTY SEES MARKETING INDUSTRY LEADERS AND THEIR FAMILIES IN ATTENDANCE GOLDEN MIKES RADIO ADVERTISING AWARDS 2018 RECOGNIZE INDUSTRY’S MOST DESERVING ACHIEVERS AIMA MANAGING INDIA AWARDS HONOUR THE BEST IN THE INDUSTRY BW BUSINESSWORLD’S GREAT INDIA DEBATE BRINGS TOGETHER INTELLECTUALS ACROSS INDUSTRY SECTORS BW BUSINESSWORLD SMART CITIES CONCLAVE PATNA 2018 SEES EMINENT INDUSTRY LEADERS IN ATTENDANCE EMINENT JURY PICKS WINNERS OF GOLDEN MIKES RADIO ADVERTISING AWARDS MADDYS 2018 SEE TOP ADVERTISING AND MARKETING INDUSTRY LEADERS IN ATTENDANCE

Gaurav Dua, Executive Director, Relaxo Footwears talks to exchange4media about the brand's re-branding, marketing strategy, future plans and much more

The brand through its campaign is helping Indian professionals imbibe the new work-culture while making an effortless style statement at their workplace

In this campaign, the brand MRF tyres intends to communicate their proposition of 'comfort made more comfortable'