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Idea debuts with a 23% premium; invests $2 bn in two years

Idea debuts with a 23% premium; invests $2 bn in two years
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First Published: Fri, Mar 09 2007. 11 42 AM IST
Updated: Fri, Mar 09 2007. 11 42 AM IST
New Delhi: Aditya Birla group flagship Idea Cellular today listed with a 23% premium at Rs92.40 over its issue price on the Bombay Stock Exchange.
With this listing Idea Cellular has entered the top 50 companies at the bourses in terms of market capitalisation. Based on today’s listing price its market capitalisation stands at about Rs23,000 crore.
Idea Cellular listed over Rs259.28 crore equity shares of Rs10 each on the Bombay Stock Exchange and National Stock Exchange and the issue price had been fixed at Rs75 per share.
The initial public offer (IPO) of the cellular operator had received robust response from investors for its Rs32.69 crore shares on offer, getting over subscribed 57 times with an overwhelming demand from Qualified Institutional Buyers.
Meanwhile, Idea Cellular plans to invest almost $2 billion in the next two years to help fend off increasing competition from the entry of Vodafone Group Plc.
Idea, based in Pune, will invest in its network, India’s fifth-largest, to increase its market share from 8.4%, Managing Director Sanjeev Aga said in a telephone interview.
The operator, controlled by billionaire Kumar Mangalam Birla, garnered bids for 50 times the shares it offered in the initial sale as investors sought to tap the world’s fastest- growing cell-phone market. Vodafone is paying $11 billion for control of Hutchison Essar Ltd to gain its first Indian network.
Idea operates in 11 of the 23 telecommunications zones. The company is building networks in the commercial capital of Mumbai and the eastern state of Bihar and has applied for licenses to operate in the remaining 10 circles, Aga said. “The investment does not cover new circles,” he said.
Local mobile call rates of as low as $0.02 (Re0.88) a minute have fueled competition in a market of 162.2 million users. India, Asia’s fourth-largest economy, added 6.81 million wireless users in January. Almost 80% of the 201.6 million telephone users in India are mobile-phone subscribers.
Revenue per user will probably be maintained, Aga said. Idea had average revenue per user of Rs338 at the end of December, according to its offer document.
Idea, 58% owned by Aditya Birla Group, competes with larger rivals Bharti Airtel Ltd, Reliance Communications Ltd, and state-run Bharat Sanchar Nigam Ltd.
The company, which has 3.6 million users for its service based on the Global System for Mobile Communication standard, raised Rs24.52 billion selling 326.9 million shares at Rs75 each. The stock will list on the Bombay Stock Exchange and the National Stock Exchange today.
The company made a pre-IPO placement to its owners for Rs3.75 billion at a same per-share price. Citigroup Inc. and Providence Equity Partners Inc. hold a minority stake in Idea.
The share sale was lead managed by JM Morgan Stanley Pvt. and DSP Merrill Lynch Pvt. Citigroup Global Markets India Pvt. and UBS Securities India Pvt. were senior co-managers for the public offering.
The number of telephone users in India may more than triple to 650 million by 2012 as carriers lure subscribers with cheaper tariffs and expand reach in rural areas, the government said 27 February in its annual economic survey.
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First Published: Fri, Mar 09 2007. 11 42 AM IST
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