Hutchison Essar buys BPL Mobile for USD1 billion

21 Jul 2005

Indian wireless joint venture Hutchison Essar Telecom (HET) announced yesterday that it has bought a controlling stake in rival BPL Communication’s mobile businesses for a price estimated at USD1 billion. HET, a partnership between Hong Kong’s Hutchison Telecommunications and India’s Essar Group, acquired BPL’s wireless units BPL Mobile and BPL Cellular, which together constitute the country’s fifth largest mobile services provider. If approved by the government, the transaction will see Hutchison’s controlled Indian customer base jump to around eleven million, challenging state-run Bharat Sanchar Nigam Ltd (BSNL) for second place in the market and providing serious competition to market leader Bharti Tele-Ventures (AirTel), part owned by Singapore Telecom.

The majority of Hutchison’s regional subsidiaries in India are joint ventures, with Hutchison Essar Telecom East and Hutchison Essar South Ltd both 49%/51% partnerships with Essar Teleholdings. In late 2003 the Essar-owned Aircel Digilink regional cellcos were also integrated under the Hutch banner. Following the BPL takeover Hutchison and its partners are present in most of the country’s 26 telecoms circles. Hutchison Essar is now planning to accelerate moves to merge its various units into a single company before eventually launching an initial public offering (IPO). Earlier this month Essar Teleholdings upped its stake in Hutchison Essar Telecom to 30.4%.

The buyout heralds the departure of BPL Communications from the Indian cellular market. The group had begun to lose mobile market share and says it plans to invest the proceeds from the sale in fixed line infrastructure and other technology projects. Hutchison Essar will assume USD500 million of BPL’s debts and pay the other half of the USD1 billion price tag with cash.

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