France Telecom, which had a 26 per cent equity stake in BPL Mobile Communications, has sold the rest of its stake, amounting to 16.1 per cent, to a consortium of foreign institutional investors, said a senior official with the BPL Communications.

BPL officials said the France Telecom-Essar deal was done with the concurrence of the BPL promoters and described it as "benign" and as a "financial investment."

Essar, according to them, is only a transit shareholder, which has no deeper intentions of buying further into BPL Mobile communications.

The deal has nothing to do with the Hutchison Essar partnership which operates in several cellular circles in the country, said a senior official with BPL.

Mr Vikas Saraf, CEO of Essar Teleholdings, said: "The investment made very good financial sense to us. It is a growing company and doing well."

On the part of France Telecom, it appears that the company, burdened with its 3G investments in Europe, is exiting from its operations elsewhere globally. It had already exited from Thailand and Indonesia, and now it is exiting India.

BPL Mobile said it was re-confirming "that its medium term strategy is to partner with a strategic investor/operator and thereafter work to an Initial Public Offer."

BPL has already mandated J.M. Morgan Stanley to find a strategic investor for the BPL Mobile group, pointed out BPL officials, and Essar's temporary stake in BPL Mobile would be offloaded to the strategic investor eventually, said BPL officials.

In fact, the exit of France Telecom from BPL Mobile would remove a roadblock for the future strategic investor in the BPL Mobile group, said one of the officials. It would also facilitate a merger of the two BPL cellular companies - BPL Mobile Communications and BPL Mobile Cellular - should this be required by the strategic investor, he said.

It may be noted that Essar has bought the stake of 9.9 per cent only from France Telecom. This is in keeping with the regulation that no promoter can hold more than 10 per cent stake in two operations in the same circle.