Hutch deal for BPL's Mumbai circle lapses

The merger of Hutchison Essar with BPL's Mumbai circle has fallen through. Confirming this, sources close to the development said the proposed merger did not materialise as it failed to receive the government's approval today, the last date for the purpose.

Hutchison Essar had agreed to buy out BPL Mobile from BPL Mobile Communications in September 2005, subject to an approval from the government, which had to reach Hutchison Essar by July 31. "Hutchison Essar has terminated the agreement as the deadline expired today," the sources pointed out.

Hutchison Essar executives declined to comment.

BPL Communications owns a 74 per cent stake in BPL Mobile Communications, which is operational in Mumbai, and 100 per cent in BPL Mobile Cellular, having operations in Maharashtra & Goa, Tamil Nadu & Pondicherry, and Kerala.

The termination of the agreement for Mumbai does not affect the other three circles, for which a merger with Hutchison Essar has already been done.

Industry sources said the delay in the government's approval could prove to be a blessing in disguise for Essar, which might now agree to an extension of the deadline only if Hutchison offers it a proportionate stake increase in the combined entity.