Mumbai, Aug. 1: The Essar group today called off the proposed sale of BPL Mobile Communications (BPL Mobile) that runs cellular operations in Mumbai to the telecom joint venture Hutchison Essar Ltd (HEL), citing delay in getting necessary approvals.

The share purchase agreement signed between both the parties for the sale of this lucrative circle was conditional on receipt of government approvals by July 31.

Essar Teleholdings had acquired BPL Mobile, and other circles for Rs 6,100 crore last year from Rajeev Chandrasekhar. The other circles that came from the deal included Tamil Nadu, Kerala, Maharashtra and Goa. While these circles were acquired by Hutchison Essar and later merged with it, it was the sale of BPL Mobile that awaited government approvals.

Sources said the share purchase agreement signed between BPL Mobile and Hutchison Essar was conditional on the parties receiving government approvals by June 30. However, this was internally extended by a month to July 31. Since the approvals were not received until this date, the Essar group, it is learnt, terminated the agreement late last night.

This termination comes at a time when relations between the Essar group and Hutchison Whampoa are not on the best of terms. The Ruias have already objected to Orascom of Egypt picking up an indirect stake in Hutchison Essar.

Although officials from the Essar group were not available for comment, sources said BPL Mumbai Circle is a strategic circle with over 1.5 million subscribers. The delay in getting approvals, they added, was affecting the business of BPL since it is neither been able to grow the business nor able to merge the operations with HEL.

Sources close to Essar said the deal was called off because there was no clarity regarding whether and when the government approvals would be received. With 10 months already having elapsed for the agreement, it was imperative to take this step so as to preserve and grow the value of BPL Mumbai.

The termination of the agreement has led to two possibilities. Although the Essar group can continue as investor in this circle, it will be bound by regulations that stipulate that a company cannot have more than 10 per cent of another mobile entity in the same circle. The other option for Essar group is to eventually exit BPL Mobile, a possibility which is not denied by sources close to the conglomerate.

It is learnt that the group has already started getting feelers from majors like Telecom Malaysia, Idea Cellular, now in the AV Birla group, and Maxis among few others. Sources here said the Essar group may completely exit BPL Mumbai after a period.