Batata is a joint venture between Birla, Tata and AT&T. Share holders Tata and Birla form cream of the business aristocrats in India. Since both have no experience in the line, they joined hands with AT&T to get a share of the pie when the sector was opened up by the government. BPL Communication is part of BPL group which made its fortune in the consumer durable business and has France Telecom with them. It is felt that the need of scale and size in this business is what has brought these business groups together.
The yet-to-be-named new consortium will have a new brand completely neutral and independent of its three Indian promoters. The new entity will have 24 percent of cellular users, will cover 51 percent of fixed line telephone users and 38 percent of Indian population of one billion people. States of Madhya Pradesh, Chattisgarh, Gujarat, Mumbai, Maharashtra, Goa, Andhra Pradesh, Tamil Nadu and Kerala will be catered by the new entity. BPL will sell its license for Maharashtra separately because of regulatory reasons. Telecom regulations in the country do not allow one entity to hold two licenses for the same circle.
Sources close to BPL said that the exact equity base of the merged entity is yet to be decided. However, calculations based on the existing holdings show BPL with its 60 percent equity in BPL Communication can be the single largest shareholder with around 29 percent. Birlas, Tatas and AT&T may have a stake of around 16 percent each. The role of BPL Mobile and BPL Cellular (subsidiaries of BPL communications) and France Telecom (26 percent stake in BPL Mobile) is to be seen. Media One, which is a 49 percent shareholder in BPL Cellular, is owned by AT&T, a one-third owner of Batata.
Bharti and Hutchison are the ones that will face tough competition from the new entity as the time is near for the bid for metro circles like Delhi, Chennai and Kolkata as a fourth operator. Bharti is in Delhi and Chennai, Hutchison dominates Kolkata metro circle. RPG group, Essar, BK Modi-promoted Spice Telecom, Reliance Industry and regional players like Himachal Futuristic Communication, Hexacom and Escotel are the other players in the Indian cellular services industry. The merger looks like a significant step toward the inevitable consolidation, leaving only few large serious players.
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