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This story is from August 2, 2006
BPL deal sours over Mumbai biz
The trouble in BPL Mobile and Hutch Essar merger started to brew when Mumbai became the bone of contention.
Merger and acquisition (M&A) norms currently in play mandated that merging Mumbai into the business be scrutinised closely. Merging BPL into the company's existing operations in the city could create a monopoly.
Even as this was being dealt with, Hutchison Telecom International, sold a 10% stake in their business to Orascom, an Israeli cellular operator.
The deal gave Orascom a 4.6% stake in Hutch Essar and "shocked" the Ruias.
"While there was nothing illegal about the deal, they did not think it right to keep us informed about such a big deal," says a source at Essar. Since then, the Ruias have made their displeasure obvious.
The question now is, what will the Ruias do with the Mumbai circle, in which they hold a 9.9% stake? It is too early to respond to that, said an Essar spokesperson.
Industry observers say the logical option is to build BPL's Mumbai network, ramp up the subscriber base from about the 1.3 million at present; build a good value and sell it off to any buyer for a higher price a few months later. Or bring Hutch management back to the negotiating table.
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