RPG Enterprises said it was selling a 79.24 per cent stake in RPG Cellular Services Ltd to the C Sivasankaran-owned Sterling Infotech group for Rs 209 crore (Rs 2.09 billion).
Sources close to the deal said the Sterling Infotech group was obliged to give up the RPG brandname in the next four months. "We will function under a new name, which has not been decided as yet," a source said. Initially, Sterling Infotech will have three directors on the RPG Cellular board.
K V P Bhaskar, CEO of Aircel Ltd, which is a part of the Sterling group, is expected to take over the reins at RPG Cellular. Aircel is the leading cellular service provider in Tamil Nadu.
RPG Cellular is the second largest cellular service provider in Chennai with 210,000 customers and a marketshare of 30 per cent. Under the sale agreement, RPG Cellular's assets, customers and employees will be transferred to the Sterling Group.
Announcing this, Sanjiv Goenka, vice-chairman, RPG Enterprises, said, "The decision to divest our stake in RPG Cellular is in line with our efforts to consolidate the group and focus on core sectors -- power transmission, tyres and retailing -- and exit from non-core areas."
Sivasankaran said, "This acquisition will make us the leading mobile services provider in Tamil Nadu and Pondicherry. We believe that this acquisition will provide us an opportunity to establish our leadership in Chennai."