Ericsson to exit from Birla Ericsson Optical

Reliance Jio plans fiber broadband network in 900 towns
The MP Birla Group’s flagship company Birla Corporation and two group companies plans to acquire the entire stake of Swedish fibre-optic cables maker Ericsson Network Technologies in Birla Ericsson Optical.

Birla Ericsson Optical (BEOL) is a joint-venture of Vindhya Telelinks (VTL), Universal Cables (UCL) and Ericsson Network Technologies (ENT). The Swedish company, as an overseas promoter, holds 27.5 percent stake in BEOL, while VTL and UCL are the Indian promoters, and presently hold 66.35 percent.

Universal Cables and Vindhya Telelinks have executed a share purchase agreement (SPA) with Ericsson Network Technologies for the acquisition of entire shareholding of ENT in the company i.e. 82,50,000 fully paid up equity shares of Rs 10 each (comprising 27.5 percent of total shareholding of the company) by the Indian ventures and/or other promoters/promoter group persons/entities of BEOL as designated by the Indian venturers.

Incorporated in 1992 under the MP Birla Group of Industries, BEOL is a leading producer and designer of fibre optic cables in the country. The company’s gross revenue and net profit were Rs 273.14 crore and Rs 8.48 crore, respectively for the last fiscal.

ENT expressed its intention to dissolve the joint venture agreement and accordingly the share acquisition move was taken by the MP Birla Group, whose Birla Corp’s chairman Harsh V. Lodha is also the chairman of BEOL.

In a separate filing to the stock exchanges, Birla Corp said in the meeting held on Tuesday its board of directors approved the proposal for acquisition of a part of equity shares of BEOL in accordance with the terms and conditions of the share purchase agreement.

After the proposed acquisition, its equity shareholding in BEOL as a part of the promoter group will increase from the current 3.13 percent to 17.96 percent.

For the Birla Corp, the cost of acquiring the additional equity shares in the company would be approximately Rs 12.46 crore.