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Indian mobile giant plans share offer



By CNN's Kristie Lu Stout and reports

NEW DELHI, India (CNN) -- India's new mobile phone giant, formed by a merger between BPL and Birla-AT&T-Tata, plans to go public by the end of the year.

The merger between the two unlisted companies has created the country's largest mobile company with a million-plus customers and a dominant presence in India's mobile market of 3.7 million users.

The merged entity plans to go public in order to raise about $100 million for expansion and cellular license bids.

Details in the works

Shares may be sold to both foreign and domestic investors via an initial public offering (IPO), according to India's Business Standard.

Sanjeev Aga, chief executive of Birla-AT&T-Tata, said details of the listing have yet to be finalized.

"We want to be a listed company, but when we will list and where and how much we will raise are still to be discussed by the partners," Aga told Reuters.

Before the merger, BPL was the second largest cellular operator in India, with approximately 700,000 subscribers as of May 2001. Birla-AT&T-Tata was the country's number-four mobile operator

BPL operates mobile networks in Bombay and the states of Maharashtra, Kerala and Tamil Nadu through two operating companies BPL Cellular and BPL Mobile Communications.

France Telecom holds a 26 percent stake in BPL Mobile Communications while MediaOne, a U.S. company acquired by AT&T last year, holds a 49 percent stake in BPL Cellular.

Birla-AT&T-Tata, a joint venture between U.S. telecom giant AT&T and two of India's biggest conglomerates, the Tata and Birla groups, runs mobile networks in Maharashtra, Gujarat, Madhya Pradesh and Andhra Pradesh.

Battle with cash-rich Bharti

But analysts say even merging into a bigger mobile player may not be enough to keep the number-three mobile operator Bharti at bay.

Major players in the Indian mobile market include the market leader Hutchison, BPL, Bharti and Birla-AT&T-Tata. Reliance is also emerging from its petrochemical legacy as a potential mobile contender.

Hutchison, with 800,000 subscribers as of May 2001, followed by BPL with 700,000 and Bharti with about 650,000.

But analysts say Bharti, as India's fastest growing mobile operator, is set to become an even bigger force in the booming sector.

"Bharti is coming up to bat," said UBS Warburg's Susanta Mazumdar. "Interestingly, it is growing faster than all of them."

"What might happen is BPL might be the third largest in the near time."

In May, Bharti received an additional equity investment totaling $460 million. The capital injection included $200 million each from SingTel and Warburg Pincus.

With its war chest, Bharti may also gain an advantage when the Indian government awards licenses for fourth cellular operators next month.

Analysts say cash-rich mobile players like Bharti, Reliance and Hutchison will fare well in the auctions.

Surging mobile market

India's mobile market has surged 89 percent in the last year to reach a total of 3.7 million subscribers by the end of April 2001.

The Cellular Operators' Association of India (COAI) said the growth in usage stems from a more favorable licensing environment that in turn encouraged a fall in airtime rates.

Cellular rates in India have fallen by 50 to 75 percent over the last two years to hit a current rate of about $0.04 (2 rupees) per minute on average.

Industry watchers say rates will drop even more when additional competition is introduced after the cellular license auctions in August.






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