Batata,
BPL in $ 2 bn mobile merger
The Telegraph — June 29, 2001
- BPL
Communications and Birla-AT&T-Tata (Batata)
have made it official — they will walk
down the aisle to create India’s mobile
services Goliath worth $ 2 billion.
The announcement was made at a press conference
held in Tisco’s board room at Bombay House
by Ratan Tata of the Tata group, Kumar Mangalam
Birla of the Aditya Birla group and Rajeev Chandrashekhar
of BPL Communications.
"We recognise that one of the most important
requirements of this business is scale and size,"
Tata said. He, however, said the management
structure of the company will remain unchanged,
and that all firms will continue to retain their
own identities under a common strategy to be
forged by all partners.
"Local identities will be preserved within
the framework of a common plan. It will remain
so until we have developed a neutral common
brand," he added. There are indications
that a unified brand and corporate identity
will be fashioned gradually.
Kumar Mangalam Birla was upbeat on the merger,
saying he was delighted to see his company’s
venture transform into the country’s largest-ever
cellular services company. "Our original
investment has today evolved into the largest
cellular force in the country. This merger accords
the benefits of scale and will take consumer
service to a new high."
The merged entity will have around 18 lakh subscribers
— about a quarter of a market that is growing
at a scorching rate — and it will be owned
50.68 per cent by Batata and 49.32 by BPL. AT&T,
Birla and Tatas will each have 16.9 per cent.
It is expected to result in significant cost
savings, though the partners fought shy of spelling
out figures.
Asked whether the combine would infuse more
funds into the venture, Tata and Birla said
they are open to all options for raising capital.
"We will also be looking at an initial
public offering at an appropriate time,"
Birla told reporters.
Birla-AT&T-Tata is a joint venture between
US telecom giant AT&T and two of the country’s
biggest conglomerates, the Tata and Birla groups.
It runs mobile networks in Maharashtra, Gujarat,
Madhya Pradesh and Andhra Pradesh.
Jordan Roderick, head of AT&T’s international
wireless operations, said the merger combined
strengths of four organisations and would undeniably
provide consumers the best that wireless communications
has to offer in India.
BPL services Mumbai, Maharashtra, Kerala and
Tamil Nadu through BPL Cellular and BPL Mobile
Communications (Mumbai). France Telecom holds
a 26 per cent stake in BPL Mobile while MediaOne,
a US telecom operator snapped up by AT&T
last year, owns 49 per cent of BPL Cellular.
"We are in talks with France Telecom, which
has been supportive, and they are keen to continue
its investment in India."
Chandrasekhar told reporters that BPL’s
franchise in Maharashtra has been kept out of
the merger because it cannot hold two licences
in a state under the regulatory norms.
He hinted that operations might have to be sold
off in Maharashtra, where both Batata and BPL
vie for subscribers.
Analysts reckon that the Indian unit of Hong
Kong’s Hutchison Telecom, which is BPL’s
arch rival in Mumbai, and the Delhi-based telecom
major, Bharti Enterprises, could be interested
because it would give them a slice of the lucrative
Maharashtra market and help them enter the western
region.
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