It is curtains for the one-time poster boy of telecom who built a frontline cellular business in a regulatory environment that did not make sense even to global biggies like British Telecom, Vodafone, Telstra and AT&T. After 10 years in the business that is still growing like none other, Rajeev Chandrasekhar, the head of the BPL's cellular operations, has hung up.

PICTURE SPEAK

CASHING IN: Chandrasekhar

Chandrasekhar, who just settled a feud with his father-in-law and BPL Group patriarch T.P.G. Nambiar over control of BPL, sold his 64 per cent stake in BPL Communications to Essar Teleholdings for $1.1 billion (approximately Rs 4,500 crore) on July 20 (see box). The debt component of the deal is $600 million while the equity value is $500 million. "I am monetising my investment in the business and not bowing out of the industry," says Chandrasekhar without disclosing what he will do with the cash.

BPL Communications had been scouting for a partner ever since its proposed merger with Idea Cellular (then called BaTATA) fell through in 2002. At that time, Chandrasekhar also faced the threat of the entry of WLL (Reliance Infocomm), low investments and a smaller footprint compared to other cellular players. But between 2001 and 2004, he launched Operation Clawback and brought the company's revenues to Rs 1,100 crore and profit to Rs 70 crore for the financial year 2004-5.

WHAT HAS HE SOLD?

His 64 per cent stake in BPL Communications, a holding company for BPL Mobile Communications and BPL Mobile Cellular which has over 2.6 million mobile subscribers across Mumbai, Maharashtra, Tamil Nadu, Kerala and Pondicherry. To whom? Essar Teleholdings For how much? $1.1 billion (debt accounts for $600 million) Of which he keeps $320 million (approximately Rs 1,400 crore) TIMELINE 1994/'95: Chandrasekhar wins five cellular circle licences but is allowed to keep only three. SEPTEMBER '95: BPL launches first cellular service in India in Mumbai. 2002: Proposed merger with Idea cancelled; faced with falling market share. JULY 2003: Operation Clawback launched to make company profitable again. MARCH 2005: Revenues of Rs 1,100 crore and profits of Rs 70 crore notched up. JULY 2005: Chandrasekhar considers sellout. Sells holding company to Essar.

The company was then ready for the fashion parade before international investors who wanted a share of the telecom pie in India. But the best suitor finally turned out to be Essar. With a cheque for about Rs 1,400 crore in his hand, Chandrasekhar has to think of investing in greenfield projects where the returns would be higher than the 7 per cent he earned in the telecom business. The exit of BPL from the business which it entered before most others is yet another signal of the consolidation going on in the industry where only three or four big players like Airtel, Reliance and Hutch are likely to eventually exist.

Although Hutchison Essar will eventually take control of BPL's mobile business, the current deal has been struck by the Essar Group as one company cannot hold more than 10 per cent stake in more than one operator in a single telecom circle. Essar currently has interests in the telecom arena through its three companies. Essar Teleholdings holds 9.99 per cent in BPL Mobile Communications and 30.42 per cent in Hutchison Essar, which operates in 13 circles. Another company, Essar Spacetel, has applied for licences in seven new circles. Says Ravi Ruia, vice-chairman of Essar: "This agreement, along with the Essar Group's other plans in the telecom sector, will give us a pan-India footprint."

This acquisition will complete Hutch's presence in all 23 circles in India. Says Nimesh Kampani, chairman and MD, JM Morgan Stanley, the investment bank that worked on the deal: "The proposed combine of Hutch Essar and BPL Mobile will emerge as a strong force alongside Airtel and Reliance." Only the high and mighty will now rule the airwaves.

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