Hutchison Whampoa moved the Bombay High Court disputing the termination notice issued by its Indian joint venture partner Essar.
NEW DELHI: Hutchison Telecommunications, an arm of Hong Kong-based Hutchison Whampoa, moved the Bombay High Court on Wednesday disputing the termination notice issued by its Indian joint venture partner Essar.
Hutch is also learnt to have restrained Essar from the sale of BPL shares.
Essar and its associates issued the termination notice on Tuesday over the merger of BPL Mobile (Mumbai circle) with Hutch Essar. The Bombay High Court is expected to hear the case on Thursday.
According to sources, Essar is likely to challenge Hutch Essar Ltd “as the actions taken by Essar are within its legal rights as per the agreement”.
Essar, meantime, has offered to refund the deposit of Rs 1,600 crore, that it had received from Hutch Essar for the Mumbai merger deal within five days of the termination notice as per their agreement, sources said.
Even as Essar officials had earlier pointed out that the deal was called off due to delay in getting government approvals for the merger, a Hutch spokesperson from Hong Kong on Wednesday said “the termination from Essar is regrettable and groundless”.
The spokesperson added, “We will take appropriate actions to pursue the completion of this transaction. All conditions related to the purchase have been met or waived.”
The share purchase agreement, which was signed between BPL Mobile and Hutch Essar in September 2005, was conditional on the parties getting government approvals by July 31.
Interestingly, a source in the Department of Telecommunications (DoT) told DNA Money on Wednesday that government approval in the form of a ‘no objection’ certificate was likely soon for the Hutch Essar-BPL merger deal in Mumbai.
“As soon as DoT is officially informed of the FIPB clearance to the Hutch Essar equity structure, the telecom ministry would process a no-objection for the merger with BPL in the Mumbai circle,” the source said.
Even as FIPB recently approved the direct and indirect shareholding in Hutch Essar, DoT is yet to get an official intimation on the same, it is learnt.
At a meeting on July 14, FIPB is understood to have taken on record the previously approved direct and indirect foreign holding of Hutch Essar at 68%. The permitted FDI level in a telecom venture is 74%.
Essar had bought BPL Mobile at an enterprise value of $1.1 billion in September 2005. The deal was later extended to Hutch Essar for a merger. While the Hutch Essar-BPL merger was concluded in three circles in January, the one for the lucrative market of Mumbai has been pending, leading to the termination notice and now the court case.
Company sources claimed that Essar would now focus on building the BPL Mumbai operations and try to add value to the brand.
Due to the failed deal, Hutch Essar will be deprived of the BPL subscriber base of over 1.5 million in the lucrative Mumbai market. Mumbai is the only market where Hutch Essar and BPL brands have competing operations.
Currently, Hutch Essar is the leading mobile service provider in Mumbai, with over 2 million users. Among other GSM players, Bharti Airtel has over 1.3 million mobile users and MTNL over 1 million in the Mumbai circle.
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