The race to buy out Hutchison Essar Ltd (HEL) may be heating up. But Essar, which owns 33 per cent of the stake, is determined to retain BPL Communications, the entity it acquired from Rajeev Chandrashekhar for an enterprise value of $1.5 billion in 2005, irrespective of what it does with the rest of its holding.
BPL Mobile Communications offers telecom services in Mumbai and has more than 2.5 million subscribers.
An Essar spokesperson when contacted said, "We would not like to comment on the issue since the matter is sub-judice."
Essar would like to run BPL as a separate entity no matter what the final outcome of the ongoing discussion on sale of 67 per cent stake by Hutchison Telecom International Ltd (HTIL) in HEL.
Essar itself is a prospective buyer, but there is speculation that it may sell off its own stake too, if another player ultimately acquires the HTIL stake.
Since Essar's stake in BPL is only 9.9 per cent, it will be able to run its BPL operations no matter what - the legal stipulation of one promoter not holding more than ten per cent stake in more than one telecom circle will not apply.
Sources in Essar said, "Whether we buy the entire or part of the 67 per cent stake of HTIL or sell our 33 per cent stake in HEL, BPL would be operated as a separate company. So we will not exit from telecom services at any given point."
Essar had agreed to merge the company with HEL for which time had been given till July 2006. But since the approvals did not come till July 31, it was decided to set BPL aside as a separate entity of Essar.
Both Hutchison Essar and Essar approached for the legal intervention in Mumbai High Court that asked both the parties to appoint an arbitrator. Hutch is yet to appoint an arbitrator.
Essar had also offered to refund the Rs 1600 crore that they had received from Hutchison Essar as a deposit for the purchase of BPL subject to getting approvals from the government for the merger.
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