Idea Cellular acquires 40.8% stake in Spice

Idea Cellular acquires 40.8% stake in Spice

New Delhi: Aditya Birla group’s Idea Cellular has signed a deal to acquire BK Modi’s stake in Spice Comm. It will 2,716 crore for a 40.8% stake at 77.30 per share in cash and stock. "Idea will benefit operationally by leveraging synergies with TMI which will be a significant shareholder of our company,“ Idea Cellular Ltd Chairman Kumar Mangalam Birla said.

This deal will take Idea Cellular’s market share to 11.1%. More importantly, it would get the crucial spectrum on 900 Mhz band.

Telekom Malaysia will also invest upto $2 billion in the company but according company officials its stake will not go above 20% in the joint entity.It will have one seat on the company board.

Idea will pay an additional Rs544 cr as non compete fee. Spice Comm will delist once the open offer is completed, said dea Cellular Ltd Managing Director Sanjeev Aga. He added that the timeline for the same should be about 6 months.

Spice currently operates in two circles of Karnataka and Punjab, and has been allotted a license for operations in four more circles. It has a subscriber base of around three million.

Idea Cellular currently operates in Andhra Pradesh, Delhi, Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Chhatisgarh, Maharashtra, Goa, Rajasthan and UP. With this deal, it will be able to enter the wireless markets of Punjab and Karnataka, which account for 11% of India’s total wireless subscribers.

The new entity will undertake capex plans of 10,000 crore over the next two to three years.

Idea scrip movement

Spice scrip movemnt

Spice financials

Idea financials

Idea corporate history

Spice corporate history

“The strategic move travels beyond Punjab and Karnataka. By the end of the year, the Idea yellow will increasingly colour the Indian landscape," Aga said.

According to TRAI figures, Idea Cellular, has a 12.72% of the Indian GSM telecom market. It added 1.1 million customers in May to take its total subscriber base to 26 million at the month-end. The total GSM subscriber base climbed up to 205 million users my May end.

The shares of Idea Cellular reacted positively and surged as much as 6.80% over its previous close in a weak Bombay Stock Exchange. The scrip was last quoted at 105.50, up 6.40% on the BSE.

With an addition of 6.27 million subscribers in the month of May, the total GSM subscriber base climbed up to 205 million users. Bharti Airtel Ltd, remained the country’s largest mobile service provider with a subscriber base of 66.8 million. It has a market share of 32.52%. Vodafone Essar, the number two GSM player has a market share of 23.10%. Its subscriber base stood at 47.4 million at the end of May.

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