BPL Mobile is buying out AT&T Wireless from its 51:49 joint venture, BPL Mobile Cellular Ltd. It has simultaneously initiated discussions with a clutch of financial investors to offload equity in the company.
While the exact acquisition price is not known, AT&T's stake in the company has a face value of about Rs 750 crore (R 7.5 billion).
| Big plans |
| Footprint in Kerala, Pondicherry, Goa, Tamil Nadu and Maharashtra
Plans fresh investment of Rs 500 crore to touch the 2-million subscriber mark Targets Rs 1,200 crore revenue and Rs 450 crore operating profit this year BPL Mobile holds 51% in BPL Mobile Cellular Ltd and AT&T Wireless holds the balance AT&T to focus on North America, to monetise all assets elsewhere |
Following the acquisition, the Indian promoter plans to make a fresh investment of Rs 500 crore (Rs 5 billion) and also to restructure its investor holdings.
Confirming the move, Sandip Basu, President & Chief Executive Officer, BPL Mobile, told Business Standard: "We are moving towards the next stage of consolidation and growth and I believe the timing of the acquisition could not have been better. The acquisition of AT&T's stake gives us the flexibility to approach financially strong investors who are committed to investing in the Indian cellular market."
Basu, however, did not disclose how BPL Mobile raised funds for buying AT&T out of the venture. According to AT&T sources, the exit from BPL was in line with the company's decision to focus on North America.
"The move is part of an ongoing plan to monetise non-North American assets," the sources said.
In India, the US-based telecom company has interest in Idea Cellular, a joint venture with the Tatas and Kumar Mangalam Birla, where it holds 33.33 per cent stake.
BPL Mobile Cellular offers services under the brand name BPL Mobile in Maharashtra, Goa, Tamil Nadu, Kerala and Pondicherry.
The acquisition does not have any impact on BPL's operations in Mumbai, which is joint venture with France Telecom.
The acquisition comes within four months of BPL tying up long-term debt for BPL Mobile Cellular. The total project cost was valued at Rs 3,248 crore (Rs 32.48 billion).
The project has been funded with an equity contribution of Rs 1,489 crore (Rs 14.89 billion) by the promoters, BPL Communications and AT&T Wireless, and the balance through long-term debt of Rs 1,759 crore (Rs 17.59 billion).
The company had also concluded in July this year one of the largest rupee-denominated non-recourse financing in the Indian telecom industry.
Basu said BPL was targeting a subscriber base of 2 million in the current financial year, Rs 1,200 crore (Rs 12 billion) as revenue and an operating profit of Rs 450 crore (Rs 4.5 billion).
On the marketing front, BPL Mobile is rolling out intelligent network platform and installing over 200 base stations across all the four circles.