After the $11.1 billion winning bid by Vodafone for Hutchison, the spotlight now shifts to the Ruia-owned BPL Mobile Communications.
"The days of single circle and local brands are now over. The Ruias would have to either sell or merge BPL Mobile, and let the BPL Mobile brand fall off the radar," said an industry source.
Ever since a dispute broke out between Hutchison and Essar, BPL Mobile Communications, which was sold off by Rajiv Chandrasekhar to the Ruias for Rs 4400 crore (Rs 44 billion) in July 2005, has been finding itself right in the middle of a shareholders' war. In fact, Hutch started poaching people from BPL Mobile, to which the Ruias' strongly objected.
Though BPL's other two circles -- Kerala and Tamil Nadu -- were merged with Hutchsion, the Mumbai circle was embroiled in a controversy, with Essar refusing to sell it to its partner citing government norms.
An Essar spokesperson said they were not planning to sell it.
"We have just invested Rs 200 crore (Rs 2 billion) in the company, and we have no plans to sell it off at this stage."
Telecom analysts, however, are sceptic of BPL Mobile's future as standalone brand. "We have to wait and watch as there are many regulatory issues, which bar a single company owning more than 10 per cent stake in the same circle," sources added. As Vodafone has taken over Hutchison, the Ruias would have to find a way out of regulatory issues.
S Subramanium, CEO of BPL Mobile in Mumbai, refused to be drawn into the battle between shareholders, and said the company was growing revenue wise. "As of now, we have no intimation about the status of BPL Mobile's future in Mumbai," he added.
BPL Mobile was one of the first telecom companies to make entry into the lucrative Mumbai market alongwith Hutchison in 1995. The company, however, failed to keep pace with rising competition. Dispute over control on the company between Chandrasekhar and his father-in-law also held back its investment plans. After the company was sold off to the Ruias, it could not grow due to Ruia-Hutch battle, which made its way into the Mumbai courts.
BPL Mobile added just 3583 subscribers in December as against 32,402 by Hutch and 92,161 by Airtel in the same month, according to a data by Cellular Operators Association of India.
Meanwhile, it was business as usual for the the Essar group promoters -- the Ruias -- even after the Vodafone offer valued the Essar group's one-third holding at $ 6.33 billion. The valuation is quite impressive, especially compared with Essar group's total investment in the company to the extent of $2 billion over past 11 years.
Group's vice-chairman Ravi Ruia and managing director Prashant Ruia came straight to the Essar House, group's headquarters in central Mumbai, after returning from London and met chairman Sashi Ruia to finalise their future course of action.
Although the Ruias were tightlipped about their plans, it was clear they would not exercise their rights of first refusal to match the Vodafone offer. To simply put, they would table an offer before their joint venture partner HTIL to stamp the Vodafone bid.
Sources close to the group said it would investment $10 billion (Rs 45,000 crore or Rs 450 billion) in various planned projects in next five years. The investments will be made in setting up greenfield projects in steel, power, refinery and special economic zones.