Hutchison International Telecommunications and Essar, its joint-venture partner in India, have agreed to buy two units of BPL Communications together for US$1.15bn, ending two months of disagreement and confusion.
HTIL, controlled by tycoon Li Ka-shing, had insisted it was not part of the deal when Essar first announced plans to buy the BPL units in late July.
But HTIL said this week that its Hutchison Essar joint venture rather than Essar itself had agreed to buy the businesses from BPL directly for US$1.15bn..
The purchase will turn the joint venture into India’s third-largest mobile operator.
BPL operates in four of India’s telecoms circles, or regions, three of which will be new to Hutchison Essar, which currently has operations in 13 of India’s 23 telecoms circles.
Hutchison Essar also announced it had agreed to pay US$6m for a subsidiary of Essar, which has applied to operate in seven telecoms regions currently not served by the joint venture.
The deal will help Hutchison Essar achieve a national footprint and compete with Airtel and Reliance, the country’s two biggest mobile operators.
However, it was unclear how the inclusion of the new businesses might affect HTIL’s planned spin-off of its operation in India, which has already been delayed by regulatory hurdles.
Analysts and bankers had said the HTIL-Essar relationship had faced some difficulties and the two had had disagreements over BPL, the structure of which had changed completely in the last two months.
Essar announced in July it had agreed to buy a controlling stake in BPL Communications for US$1.2bn, with the intention of merging BPL’s mobile operations with Hutchison Essar.
But a senior executive at HTIL said at the time: “The transaction is between Essar, not Hutchison Essar, and BPL. That’s that transaction.” Two weeks later, however, HTIL said it was “exploring ways” to acquire the units with Essar.
In August, HTIL also changed the name of its joint venture in India from Hutchsion Max to Hutchison Essar, reflecting an improvement in the relationship between the partners.