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Licence roadblock before Batata

G. Rambabu

NEW DELHI, Nov. 29

THE mega merger between Birla AT&T, the Tatas (Batata) and BPL could hit a roadblock on the licence front.

Official sources said the Department of Telecommunications (DoT) is unlikely to allow the request for a two-way split in the licence held by BPL Cellular Ltds for providing mobile services in Maharashtra, Tamil Nadu and Kerala.

The company had recently sought permission to divide its licence on a circle basis, which is crucial for fruition of the merger.

The sources noted that without such a split, the company would not be able to sell off the licence for the Maharashtra circle, which at present cannot legally form part of the merger since Batata too operates there.

DoT has expressed the opinion that since the licence has been given to the company and not for individual circles, it would not be feasible to allow such a split.

If permission is given to BPL Cellular to split its licence on a circle basis then DoT could face legal wrangles, sources said. It had earlier refused a similar split in licence to JT Mobile, when it sold the licence to Bharti. As a result, Bharti got sa ddled with the Punjab circle in addition to Karnataka which it was keen on.

Batata at present offers cellular services in Maharashtra, Gujarat, Andhra Pradesh and Madhya Pradesh, while BPL Cellular Ltd operates in Maharashtra, Tamil Nadu and Kerala. BPL Mobile, another group company, which too would form part of the merged entit y, offers the service in the Mumbai circle.

As both the groups are currently operating in Maharashtra, if they merge all their operations, it would run counter to the licence agreements. One of them has to necessarily quit the Maharashtra circle, the officials said.

The licence agreement clearly states that no single company/legal person, either directly or through its associates, shall have substantial equity-holding in more than one licence company in the same service area for the same service.

Given these circumstances, if this tie-up has to go through, BPL Cellulars operations in all the three circles will not be included in the deal. This would defeat the very purpose of the merger to create the largest cellular entity in the country.

As per the latest estimates, the proposed Batata-BPL combine continues to corner the highest market-share, having notched up 12.35 lakh subscribers by end-October. It accounts for 25 per cent of the total mobile subscribers in the country.

At the group level, Batata has a subscriber base of 5.92 lakh, BPL Cellular 4.49 lakh (including 1.7 lakh in Maharashtra) and BPL Mobile 3.52 lakh. A merger of Batata with only BPL Mobile would, therefore, mean a total subscriber base of 9.44 lakh, placi ng it at the third place after Hutchison (10.53 lakh) and Bharti (10.15 lakh).

When contacted, company officials would not comment on the matter saying that DoTs decision is yet to be conveyed to them.