HTIL unit asks court to stop sale by Essar

PUBLISHED : Saturday, 05 August, 2006, 12:00am
UPDATED : Saturday, 05 August, 2006, 12:00am

Joint venture seeks to halt disposal of Mumbai mobile business to third party

The Indian mobile unit of Hutchison Telecommunications International Ltd (HTIL) has asked the courts to stop Essar Group, which owns 33 per cent of the joint venture, from selling its Mumbai mobile business to a third party.

The request for an injunction came after Essar on Monday killed a deal to sell the Mumbai unit to their joint venture.

Hutchison Essar, in which HTIL owns a 67 per cent stake in partnership with Essar, filed the suit on Thursday after the Indian telecommunications operator refused negotiations to settle the dispute over the HK$2.7 billion deal to sell BPL Mumbai to the joint venture.

The court is expected to rule on the case next Wednesday.

Essar Teleholdings chief executive Vikas Saraf did not return a call for comment.

'We are very confident that HTIL and Essar are aligned in their views towards the long-term development of Hutchison Essar,' an HTIL spokeswoman said last night.

Hutchison Essar is the largest operator in Mumbai with 2.1 million customers. It operates in 16 of India's 23 licence regions. Essar is due to sell another seven licences to Hutchison Essar.

The dispute centres on whether the sale, first unveiled in September last year, had been approved by the Department of Telecommunications. Essar told the court the deal could not be completed because the requisite approval had not been obtained.

HTIL, in a statement to the Hong Kong stock exchange on Wednesday, insisted that all the actions needed to complete the deal had either been met or waived.

It said it would 'take appropriate actions vigorously' to close the transaction but stopped short of saying it would resort to the courts for a settlement.

According to Indian press reports, Essar has hired bankers to seek other potential buyers for the asset. Essar spokesman Ganesh Pai declined to comment. A telecommunications department official familiar with the deal was unavailable for comment.

HTIL intends to spin off Hutchison Essar, valued at US$10.6 billion by some analysts, as early as the end of this year.

Buying BPL Mumbai was part of a US$1.15 billion deal announced in September last year in which Hutchison Essar would also buy from Essar another unit, BPL Cellular, which operates in the three licensed regions of Maharashtra, Tamil Nadu and Kerala. That sale was completed in January

A source close to HTIL said Essar and two other BPL Mumbai shareholders did not honour the sale agreement 'as they probably wanted to fetch a higher price than the agreed HK$2.7 billion', the source said.

It hopes to expand to all 23 regions by buying the seven remaining licences being applied for by Spacetel, also a subsidiary of Essar, for US$6 million cash.

'The Spacetel acquisition is on-going and not affected,' the HTIL spokeswoman said.


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