Date:27/09/2005 URL: http://www.thehindubusinessline.com/2005/09/27/stories/2005092703810300.htm

Back Hutch signs pacts to acquire BPL cos, Essar Spacetel

Our Bureau

Mumbai , Sept. 26

HUTCHISON Essar Ltd has entered into binding agreements for the acquisition of BPL Mobile Cellular and BPL Mobile Communications for $1.15 billion (Rs 5,060 crore); it has also signed a conditional agreement for acquiring Essar Spacetel Ltd for $6 million (Rs 26 crore) in cash.

This would make Hutchison Essar the fourth entity after the BSNL-MTNL combine, Reliance Infocomm, and Bharti Televentures to have a complete pan-India wireless footprint.

The company's intention to acquire the BPL Mobile companies had been announced earlier. This acquisition adds BPL's Tamil Nadu, Maharashtra and Kerala circles to its footprint, not to mention the second largest subscriber base in Mumbai where Hutch already tops the list in subscriber numbers.

With buying Essar Spacetel, Hutchison Essar will complete its India footprint. Essar Spacetel is an Essar group company, which has applied for licenses in seven circles in the country where neither Hutchison Essar nor BPL have operations.

These circles are Madhya Pradesh, the North-East, Himachal Pradesh, Bihar, Orissa, Assam, and Jammu & Kashmir.

The customer base of Hutchison Essar will immediately rise to over 12 million with these acquisitions. The cost of these acquisitions will be funded by a combination of funding and external bank borrowings of Hutchison Essar, a news release from the company said.

Hutchison Essar is a joint venture between Hong-Kong-based Hutchison Telecommunication International Ltd and the Essar group.

Mr Ravi Ruia, Director of 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."

Mr Dennis Lui, Director of Hutchison Essar and Chief Executive Officer of Hutchison Telecommunications International Ltd, said, "These are defining acquisitions for Hutchison Essar. By giving us the ability to complete our nationwide coverage, they position 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," Mr Lui added.

Hutchison Essar had been planning a domestic initial public offer but the foreign partner had sometime ago postponed it sighting dissatisfaction with the current regulations that allow a foreign company to own no more than 49 per cent equity in a telecom company.