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The Bombay High Court will pass an order on the Hutch-Essar case tomorrow after hearing arguments from both sides. CNBC-TV18 reports on the issues at stake and the possible impact it would have on the Hutch-Essar joint venture.
It looks like BPL's Mumbai subscribers will continue under the BPL brand for some time. The Hutch-Essar battle will mean that BPL will continue to be neglected, at least till an interim solution is reached. The bone of contention in this case is really the permission from the Department of Telecom, DoT, for merging BPL-Mumbai into Hutchison Essar. Hutch has challenged the termination notice served by Essar for the BPL deal. Hutch's argument is that it has paid 97.5 per cent of the money to BPL and to get DoT's permission is its responsibility and Essar should just transfer the shares to Hutch. Essar however says that DoT permissions are mandatory for it to complete the deal. Essar had terminated the agreement to merge BPL on the pretext that Hutch did not manage to fulfill all requirements and did not get DoT approvals. Essar then said that it would manage the operations of BPL entirely on its own. After putting BPL back on its feet, Essar plans to sell it to a third party. Hutch, however, says that in case it does not get approvals from DoT, it should have the right to sell, since it has paid for the deal. While both parties are trying to settle the matter out of court, BPL will continue to suffer from lack of attention. This isn''t the first sign of trouble for the Hutch-Essar joint venture. Essar has also objected to Egyptian telecom player Orascomm getting an indirect stake in the JV. Rumour has it that Orascomm wants to be a major player in India. It's this rumour that's troubling Essar. It is clear that Essar wants a higher stake in the JV, which is why they bid for the Hinduja stake. Hutch outbid them though. So will the Hutch-Essar joint venture survive these bumps? Sources at Essar say yes, but only if there aren't any changes in ownership and management. So if Hutch sells any more stake to Orascomm or any other investor, it's possible that this JV may not survive.
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