Spice Comm merger talks on, Batelco in fray

Spice Comm merger talks on, Batelco in fray

New Delhi: Talks between the promoters of Indian mobile phone services firm Idea Cellular Ltd, smaller rival Spice Communications Ltd and its foreign partner Telekom Malaysia Bhd over a merger or sell-out are progressing, one person close to the situation said, even as a new suitor, Dubai-based Bahrain Telecommunications Co. or Batelco, has entered discussions in a deal that will pare fully or in part the 40% stake held by the B.K. Modi family in Spice.

“Telekom Malaysia and Idea are engaged in talks, and Spice has not got the offer yet. All the three companies are looking into their valuations post the deal. In case Telekom Malaysia and Idea strike a deal, (the promoters of) Spice will exit the mobile phone service business," this person said, asking not to be identified. “Nothing has happened so far, an announcement will not happen before Tuesday or Wednesday." Telekom Malaysia owns 39.3% in Spice; the rest is held by public shareholders and institutions.

Yusof Annuar Yaacob, executive director and group chief financial officer of Telekom Malaysia, said on the telephone from Kuala Lumpur that he had no specific comment on the stage the talks were in.

“We are very committed to India and want to remain in the market," he said. “We want to participate with a large footprint in a bigger company. We are looking at a number of options, and objectives which should satisfy that of Modi’s and ours," he said.

The person quoted earlier also said Spice’s promoters are in talks with Batelco to buy out Telekom Malaysia's stake. Batelco is a leading integrated communications provider in Bahrain, other parts of West Asia and north Africa.

Shares of the company, which has joint venture operations in Jordan, Kuwait, Yemen, Saudi Arabia and Egypt, are listed on the Bahrain Stock Exchange with a market capitalization of some $1.2 billion (Rs5,119 crore) as of February.

Messages and calls to Batelco Group board secretary and company spokesman Ahmed Al Janahi were not returned on Sunday.

Mint on Friday had reported that Japan's biggest mobile phone company NTT DoCoMo Ltd was in a three-way discussion between itself, Telekom Malaysia and Idea Cellular for a stake in Spice.

According to the person quoted earlier, Lazard and Co. is advising Telekom Malaysia, Merrill Lynch and Co. is advising the Aditya Birla business group, which is the controlling shareholder in Idea Cellular, and KPMG India is advising the Modis of Spice in the deal. This could not be independently verified by Mint on Sunday. 

A Mumbai-based analyst, who asked that neither he nor his employer be named, said the impact of a deal on the acquirer would depend on the value paid for Spice shares. “If a deal is struck at Rs50-60 a share of Spice Communications, then there will be no negative impact on Idea Cellular’s shares. If it happens at the Spice’s asking rate of Rs70-75 each, then there will be a slight negative impact which will be less than 5% on Idea’s shares," the analyst said.

Shares of Idea shed 2% and closed at Rs104.95 each on Friday, valuing the company at Rs27,671.3 crore. Shares of Spice closed Friday down 2.89% at Rs51.95  each, valuing it at Rs3,584.1 crore.

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