Essar Teleholdings had acquired BPL Mobile, which operates in Mumbai and three other circles, for a total consideration of around 5,200 crore ($1.15 billion) last year. Essar had in turn sold three circles to Hutchison Essar, subject to necessary approvals.

Essar Teleholdings now proposes to build on BPL Mumbai's operations and add value to it. Essar, meanwhile, had also received several inquiries from prospective buyers, including the A V Birla group, Maxis and some West Asian companies ahead of the 31 July deadline.

The sale agreement signed by Essar and Hutchison Essar was conditional on the parties receiving government approvals by 31 July 2006.

A merger of BPL Mobile and Hutchison Essar would also have meant that the combined entity surrender up to 15 Mhz of spectrum - a losing proposition for both the companies.