In a major acquisition in the telecom sector, the Ruia-managed Essar Group on Wednesday bought a controlling stake in BPL Communications for a consideration of over Rs 4,400 crore (Rs 44 billion).
"BPL Mobile has entered into a binding agreement with Essar, for Essar to acquire a controlling stake in BPL Communications. The deal is valued at over $1 billion (over Rs 4,400 crore)," Rajeev Chandrasekhar, Chairman and CEO of BPL Mobile said.
Chandrasekhar said Essar would be buying 67 per cent stake directly, while the remaining would be bought over from other shareholders, both foreign and domestic investors.
"It is the stated intention of both parties to eventually have BPL Mobile merge with Hutchison Essar's cellular services after necessary approvals," he said. "Once merged, Hutch Essar will become a strong competitor to the two large cellular operations of Reliance and Airtel," he added.
Chandrasekhar also said this is the largest ever acquisition in the telecom sector.
BPL Communications owns a 74 per cent stake in BPL Mobile Communications having operations in Mumbai and 100 per cent ownership of BPL Mobile Cellular with operations in Maharashtra and Goa, Tamil Nadu and Pondicherry and Kerala.
With this acquisition, Hutchison-Essar would have services in 21 circles.
Announcing the agreement, Chandrasekhar said: "The BPL Mobile franchise has been built over the last 10 years with a lot of passion, commitment and effort and enjoys the unstinting and unparalleled trust of millions of subscribers. "The strength of our franchise along with the strong financial performance posted in recent months made us a highly valuable investment proposition for Essar," he said.
With this acquisition, the combined subscriber base of Hutch-Essar and BPL would be over 11 million.
Commenting on the deal, Ravi Ruia, vice chairman, Essar said: "This agreement gives us the ability to increase our presence in the country and add muscle to a already strong presence through Hutchison Essar's operations."
"Our aim is to become the leading telephony services provider in the region. This and Essar Group's other plans in the telecom sector will give us a pan-India footprint and make us a significant player in this business," he said.