labels: essar group, telecom
Essar files for telecom licence under BPL''s name news
07 September 2007

A CNBC-TV18''s exclusive news report finds out that Essar has filed for a nationwide telecom licence under BPL''s name. Essar has filed for a telecom licence under the name, which is a fully owned subsidiary of BPL Mobile.

>Essar is a 33-per cent partner in Vodafone-Essar and, through another entity BPL, applied for a nationwide licence.

>It would seem to be a situation of conflict, with the existing business of Vodafone-Essar, which is the third largest telecom player in this country and a disturbing development for Vodafone.

It is understood that late Thursday evening, Essar applied for a nationwide telecom licence through a company by the name of, the fully owned BPL subsidiary.

It may be recalled that a few years ago when Rajiv Chandrashekhar, the original founder promoter of BPL sold out to Essar. At that time, because Essar was invested in Hutch Essar, it had directly invested 9.9 per cent in BPL and the rest of it was owned by a series of funds, some of which are said to be close associates of Essar.

>Analysts said that this might lead to a conflict clause between Vodafone and Essar in their shareholders agreement, more so given the history that Vodafone and Essar have shared, especially when Vodafone acquired Hutch''s stake, as it was not an easy partner to deal with.

>The management of Essar has confirmed the filing of an application for a licence, but it refused to comment on the reasons. Asim Ghosh, head, Vodafone Essar, was also contacted and he had no comment to make on the matter.

>Essar already has close to 33 per cent in one major operator and if it files for another licence, it might become a regulatory issue.

>Earlier, BPL Mobile was a disputed property between Essar and Hutch, and now Vodafone, because the company was meant to be sold to the combined Hutch-Essar (now Vodafone-Essar), except that complications developed between them and eventually it was never sold.

The entire issue of the ownership of BPL is under arbitration. A few months ago, analysts had said that they believed that BPL would never be merged into Vodafone-Essar, because regulations did not allow for the spectrum transfer and therefore, the purchase might become redundant.

>It was speculated that Essar would go ahead and try and sell BPL separately, to someone who may want presence in the Mumbai market as the BPL circle is only confined to Mumbai.

None of the TRAI recommendations that have come in seem to suggest that a transfer of this sort can happen without the spectrum having to be given up. But these are just recommendations, as yet.

>As far as the shareholding goes, Essar has a 33-per cent in Vodafone-Essar and only 9.9 per cent in BPL as direct holding, making it below the 10 per cent limit, which may be doubled as per the latest TRAI recommendation. (See: TRAI doubles operator cross-holdings to 20-per cent for telecom M&As)

>How the regulator views Essar being a part of two big telecom combines or being part of Vodafone-Essar and trying to run a nationwide business separately, is something that will be known once the regulator gives its comment. The application has only been filed and nothing has been granted as yet.

>A similar situation had arisen in an earlier case where Tata Telecom had a separate licence, but was part of IDEA and had to, eventually, divest its stake in IDEA.

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Essar files for telecom licence under BPL''s name