The Hindu Business Line : Bharti `all set' to acquire Escotel — First Pacific Company may also sell out stake

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Bharti `all set' to acquire Escotel — First Pacific Company may also sell out stake

G. Rambabu

New Delhi , Dec. 31

BHARTI Tele-Ventures Ltd, flagship company of the Bharti group, is learnt to have wrapped up a deal with the Escorts group to acquire its majority stake in Escotel Mobile Communications Ltd that offers GSM cellular services in Haryana, Kerala and Uttar Pradesh (West).

According to industry sources, the promoter-to-promoter agreement between both the groups will be officially acknowledged once the intra-circle merger guidelines are finally issued by the Department of Telecommunications (DoT). This is necessary, because Bharti already offers cellular services in all the three circles and cannot make the acquisition before they are officially allowed to do so.

Escotel is a joint venture between Escorts Ltd (51 per cent stake) and First Pacific Company Ltd of Hong Kong (49 per cent). The company has a combined customer base of over 8 lakh customers and provides coverage in 180 towns, highway coverage in 77 towns and 3,000 villages in the three circles. Bharti, on the other hand, already has a presence in 15 cricles across the country and has letter of intent to offer the services in six other circles completing its nationwide reach. Only recently it had announced the decision to acquire minority stake in Hexacom Ltd, the mobile service provider in Rajasthan.

The sources noted that the deal between both the sides was negotiated after talks between Idea Cellular and Escorts broke down. Both Idea and Escorts have been in negotiations for a similar stake sale, but once the unified access service licence (USAL) regime was introduced, the discussions cooled off. The talks were started once again in November, but the exclusivity of the MoU expired on December 15 and Bharti stepped in.

While the exact financial nature of the deal could not be ascertained, sources said that it would be based on the revenue per user. Before the introduction of the UASL, Escotel was valued around Rs 1,200 crore by its valuers. The valuation has, however, suffered because of the new licence regime and the amount being paid by Bharti would be much less, they said.

Meanwhile, First Pacific Company Ltd too has expressed its intentions to exit the joint venture and will be negotiating to sell out its stake soon, making Escotel a wholly owned company of the Bharti group.

When contacted, Mr Akhil Gupta, Joint Managing Director, Bharti, refused to comment on the deal.

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