Idea Buys Spice For Rs 2,176 Crore

[Honest 836]

Spice Communications may sell stake

3 Jun, 2008, 1207 hrs IST

NEW DELHI: Telecom services provider Spice Communications Ltd has been approached by UAE-based Etisalat and others for a stake in the company, chairman B K Modi told reporters on Tuesday.

Spice was willing to consider a stake sale, Modi said at a special shareholders meeting.

"Everybody is planning to come to India. But the issue is what sort of shareholding will be there," he said.

Indian permits up to 74 per cent foreign investment in telecoms. Foreign firms are eyeing stakes in Indian telecom operators, with the rapidly expanding market and low teledensity holding out attractions for them.

Spice, which has challenged rejection for pan-India GSM licence by government, strongly pleaded to the DoT to stay the spectrum allocation process contending that it may neutralise its commercial growth.

Spice has licences to operate in six of India's 23 telecom circles but a paucity of spectrum, or radio airwaves to transmit the wireless signals, means it cannot immediately start services in all of them. It has operations in Punjab and Karnataka.

Spice had claimed a networth of Rs 1,254 crore in its application submitted in 2006. The company had included the networth of its stakeholders Modi Wellvest, Super Infosys and TMI (Indian arm of Telekom Malaysia).

However, the government found that Spice Communications, which had run into significant losses, had not taken into account the debit balance of profit and loss account - negative free reserves.

[Honest 836]

Spice open to Telekom Malaysia raising stake to 74%

3 Jun, 2008, 1346 hrs IST, PTI

NEW DELHI: Telecom service provider Spice Communications on Tuesday said it is mulling a stake sale and is open to Telekom Malaysia raising its stake to 74 per cent in the company.

The Malaysian firm Telekom Malaysia ™ now holds 39.2 per cent stake in the Indian firm.

Spice is also open to the UAE-based telecom firm Etisalat and others having a stake in it.

TM partners Etisalat and NTT DoCoMo in some markets, Chairman, Spice Communications B K Modi said, adding that "if they want to bring them in as part of the deal (for taking stake to 74 pct), we are open to that."

Modi said Spice is in talks with TM and the company is yet to receive any proposal from the latter.

He further said that for any deal, the buyers will have to pay at least Rs 60 a share for the stake.

"We are open to all offers..... I have said earlier I would not like shares to be below Rs 60. We will try to get the maximum for shareholders," he added.

Shares in Spice were trading 4.44 per cent down at Rs 56.

[Honest 836]

Spice Comm says open to stake sale offers

3 Jun, 2008, 1654 hrs IST

NEW DELHI: Spice Communications is open to all offers, including stake sale, and is currently waiting for a proposal from Telekom Malaysia before it takes a decision, its chairman said. Telekom Malaysia ™ holds 39.2 percent in the Indian telecom services provider. Spice, which currently has operations in two of the 23 telecom circles, needs funds to expand.

"We have got four new licenses and are hoping to get more. We have to expand company's capital and total investment," Bhupendra Modi told reporters on the sidelines of annual shareholders meet. Modi said although firms like UAE's Emirates Telecommunications (Etisalat) have been in talks with Spice, he was waiting for an offer from TM as Indian laws permit a maximum of 74 percent foreign holding in telecoms. "As TM has already 39 percent, any restructuring on the foreign side has to be done with TM.

So it is TM who has to finally decide and then they will propose to us," Modi said. Spice is open to TM raising its stake to 74 percent or bringing in new partners. India, the world's fastest-growing mobile services market and the second-largest market after China, has lured foreign firms like Vodafone Plc, which last year bought a controlling stake in the third-largest local cellular firm. SingTel , Southeast Asia's top phone firm, owns more than 30 percent of market leader Bharti Airtel.

Others like Etisalat, AT&T have been looking forward to make inroads in India. "As and when they ™ will be ready, I will talk to them...Once they have found a solution, I will not take more than 48 hours," Modi said. He, however, said he will not like any offer below 60 rupees a share. "That was the price at which the share was quoted just after the initial public offering...I have committed to shareholders not to make a deal below 60," Modi said.

Asked if he was ready to part away with the company, he said, "Today in a dynamic world you cannot be emotional. We are a mature business and are open to all offers." Shares of the company closed 2.3 percent down at 57.25 rupees in a weak Mumbai market.

[Honest 836]

Idea buys Spice for Rs 2,176 crore

26 Jun, 2008, 0155 hrs IST

MUMBAI: In one of the biggest deals in the Indian telecom sector, Aditya Birla group’s Idea Cellular on Wednesday said it would acquire BK Modi’s Spice Communications to strengthen its position in the growing telecom market. The deal consists of four related, but distinct transactions.

To begin with, Idea will acquire the Modis’ 40.8% stake in Spice. Subsequently, Idea will launch the mandatory 20% open offer for the Spice shareholders, jointly with Telekom Malaysia International (TMI).

Idea will merge Spice with itself and offer a 14.99% stake to TMI through a preferential allotment. Idea will earn Rs 7,294 crore ($1.7 billion, assuming an exchange rate of Rs 43) by selling this stake to TMI. This would make it one of the largest infusions of FDI into India.

Idea has agreed to buy the Modis’ 28.14 crore shares for Rs 77.30 each, totalling Rs 2,176 crore. In addition, it will shell out Rs 544 crore, or over Rs 19 a share, to the Modis as a non-compete fee. This is under the 25% limit (with reference to the open offer price to non-promoter investors) prescribed by Sebi for any such payment.

The 14.99% preferential allotment to TMI will ensure that Idea, despite being the purchaser, ends up as a net gainer in the transaction. The net income for Idea, after making payment to the Modis, will be Rs 4,574 crore.

The Idea-TM combine will launch the open offer at Rs 77.30 jointly with TMI, which now holds 39.2%in Spice. At this stage it is not clear who will pick up how much. Idea will earn Rs 7,294 crore by selling 46.47 crore preferential shares to TMI for Rs 156.96 apiece.

According to the merger formula, Spice shareholders will get 49 Idea shares for every 100 shares they held. The payment to the Modis is being funded through internal accruals. After completion of the deal, which is expected to be done in next six months, Idea’s equity base will be expanded due to issue of fresh shares to TMI, and also because of the share swap.

On Wednesday, Idea scrip closed at Rs 102.05, up 2.9% while Spice scrip touched an all-time high of Rs 73.40, before closing at Rs 72.35, a 33% gain over the previous day’s close.

ET first reported on June 10 that Spice shares will be acquired by Idea at between Rs 77 and Rs 78 per share. On June 12, we reported that TMI will buy just under 15% stake in Idea through preferential offer and will hold around 20% in the merged entity.

“Spice will be delisted and TMI’s holding in the new Idea (post-merger) will be a maximum of 20% (depending on the response to the open offer) and one non-executive board seat,” AV Birla group chairman Kumar Mangalam Birla told ET.

[Honest 836]

Spice deal: Idea readies its armada for battle

26 Jun, 2008, 0353 hrs IST

MUMBAI: In the three-way deal, Idea Cellular is laughing all the way to the bank. At a time when market conditions are choppy and many IPOs are on hold, the AV Birla group has made a killing by diluting 14.99% stake for a net inflow of Rs 4,574 crore.

With current market cap of $6 billion, Idea would have needed to dilute around 18% stake to get this kind of money. But it managed to perform the feat with a dilution of just under 15%.

The preferential allotment of shares to Telekom Malaysia International (for a 14.99% stake) has been made at Rs 156.96 per share, a 54% premium to Idea’s closing price on Wednesday. The Idea scrip closed at Rs 102.05, up 2.92%.

The deal gives Idea 4.5 million subscribers in two lucrative markets and a strategic investor like TM, which will support it in 3G rollout and in offering more value-added services.

Not only this, Idea’s balance sheet has turned debt-free. Last month, Idea monetised a part of its 16% stake in Indus Towers, the world’s largest tower company, for $640 million. It sold 20% in Aditya Birla Telecom, which holds the stake in Indus, to Providence Partners. Idea now effectively has around 12% in Indus Towers.

With these two transactions, Idea has wiped out its debt, which stood at Rs 4,250 crore at the end of March 2008. “It’s a transformational deal for Idea. It helps Idea in achieving pan-India presence and the balance sheet of the company becomes debt-free, post transaction,” DSP Merrill Lynch MD Saurabh Agrawal told ET.

It is a strategic fit for Idea and will propel it to the top league in the Indian telecom sector, he added. The company, close to rolling out operations in Mumbai, Bihar, Tamil Nadu and Orissa circles, has outlined a capex of Rs 10,000 crore for FY09 and FY10. The deal brings in the much-needed money for rolling out operations in new circles.

Moreover, while Spice has been making losses even 11 years after it started operations, Idea will not take more than three quarters to turnaround the two-circle operator. As reported by ET on June 16, the main reason for Spice being unprofitable is the sub-optimal utilisation of its infrastructure. While infrastructure cost per subscriber for Spice is around Rs 6,000, for Idea, it is around Rs 4,800 per user.

This shows that a 20-25% addition to Spice subscriber base from its year-end (it follows January-December fiscal) level will make its cost comparable to that of Idea. Spice is currently gaining subscribers at around 50% every year. This implies that it will take not more than 6-8 months to gain an additional 25% users, meeting Idea’s levels of infrastructure cost per subscriber.

[Honest 836]

Spicy Deal: Idea seeks policy clarity from DoT

27 Jun, 2008, 0049 hrs IST

NEW DELHI: After the acquisition of Spice, Idea Cellular is learnt to have written to department of telecom (DoT) seeking regulatory clarity on a host of issues, including the licences and radio frequencies that were recently awarded to Spice.

This is because, Spice was recently allotted mobile licences in four circles, Delhi, Haryana, Andhra Pradesh and Maharashtra, and Idea already has full-fledged mobile operations in all these circles.

Sources said that Idea had sounded off the DoT asking if the company should give up the licences held by Spice in these circles since Indian telecom regulations do not permit a service provider to hold twin licences in a circle.

It is also learnt that Idea has also sought clarity regarding the spectrum allotted to Spice in the circle of Andhra Pradesh. This is because, Idea already holds 8.2 MHz of radio frequencies in this circle with a subscriber base of just under 4 million.

The DoT had recently allotted 4.4 MHz of start-up radio frequencies for Spice in AP, and following the merger, the combined entity holds over 12.6 MHz of in this circle. However, as per the new subscriber-linked spectrum allocation norms issued by the DoT, a telco should have over 9 million customers in a circle to be eligible to hold on the 12.5 MHz of radio frequencies.

The new merger norms announced by the DoT allows the combined entity to hold on the radio frequencies allotted to both companies, but only if the merged company has the requisite subscriber base.

An industry source said that since the merger process would be complete only by mid-2009, Idea could use this time to build up the requisite subscriber base in a bid to hold on to the 12.6 MHz of radio frequencies.

[Honest 836]

DoT may ask for spectrum details from Idea

30 Jun, 2008, 1946 hrs IST, PTI

NEW DELHI: Department of Telecom, examining Idea Cellular's merger details with Spice, is likely to ask the company to submit its spectrum position at present along with that of Spice Communications.

Official sources said whatever readjustment would have to be done by Idea in terms of spectrum surrender as per UASL merger norms, Department of Telecom (DoT) would direct the company accordingly. Right now DoT is looking at the merger details.

The company has informed DoT about its merger with Spice seeking its approval to go-ahead.

An Idea official said it has notified the DOT about the merger and dded that it has not sought any clarification regarding the deal from the licensor.

The sources added that the deal should be able to pass the DoT clearance after making the required changes in spectrum accumulation "which could mean surrender" as well.

Going by the DoT's spectrum allocation norms, the the Idea-Spice merged entity would have to refund 4.4 MHz spectrum in Karnataka and 6.2 MHz in Andhra Pradesh as it would be difficult for the company to meet the subscriber base norm associated with these spectrum levels.

As per the Merger norms, post-merger licensee needs to meet the subscriber criterion within three months or surrender the excess spectrum.

In Karnataka, Spice with 1.8 million customers (active 1.45 Million) is allotted 6.2 MHz spectrum and Idea has been allotted 4.4 MHz start-up spectrum. Thereby, the merged entity will have 10.6 MHz spectrum in Karnataka. With a likely subscriber base of less than 2 million, the merged entity will be entitled to only 6.2 MHz and thereby have to refund 4.4 MHz within 3 months.

[Honest 836]

Idea acquires 28 cr shares of Spice in block deal on BSE

7 Jul, 2008, 2102 hrs IST, PTI

MUMBAI: Aditya Birla group firm Idea Cellular on Monday acquired as many as 28.15 crore shares of Spice Communications at Rs 77.30 each aggregating to Rs 2,175.91 crore in a block deal on the Bombay Stock Exchange.

Idea Cellular bought 28,14,89,313 shares at a traded price of Rs 77.30 of Spice Communications, as per data available on the Bombay Stock Exchange.

Earlier on June 25, Idea Cellular, the fifth-largest mobile operator in terms of subscribers, said it would acquire 40.8 per cent stake in B K Modi-owned Spice group for Rs 2,716 crore.

The Aditya Birla group firm has also made an open offer to the shareholders of Spice Communications for acquiring additional 20 per cent stake in the telecom services provider for about Rs 1,066.63 crore.

The open offer would start on August 22, and would close on September 11.

The Idea-Spice deal would catapult Idea Cellular's market share to 11.1 per cent and more importantly would get the crucial spectrum on 900 Mhz band. The long-drawn acquisition would give Idea straightaway two existing circles of Punjab and Karnataka with a subscriber base of 4.4 million.

Idea shares closed at Rs 88.40, up 0.06 per cent, while Spice Communication was quoted up 0.48 per cent at Rs 73.30.

[copperco2 24]

consolidation. is the name of the game. it seems to be better for the consumer.

[Honest 836]

Idea acquires 41 pc in Spice Comm thru open mkt, block trade

9 Jul, 2008, 1621 hrs IST, PTI

MUMBAI: Aditya Birla Group firm Idea Cellular today said it has acquired about 41 per cent stake in Spice Communications through open market and block trade transactions.

Idea Cellular has acquired 20 lakh equity shares, representing 0.29 per cent in Spice Communications at an average market price of Rs 74.81 each through open market transactions, the company said in a filing to the Bombay Stock Exchange.

Further, Idea Cellular through a block trade has acquired over 28.14 crore equity shares, representing 40.80 per cent, at a price of Rs 77.30 per piece, it added.

However, acquisition of these shares has not been completed and are held in separate escrow accounts. The acquirers of these shares would get the shares after fulfilling all its obligations under the SEBI Regulations, the filing added.

Earlier on June 25, Idea Cellular, the fifth-largest mobile operator in terms of subscribers, had said it would acquire 40.8 per cent stake in B K Modi-owned Spice group for Rs 2,716 crore.

The Aditya Birla group firm has also made an open offer to the shareholders of Spice Communications for acquiring additional 20 per cent stake in the telecom services provider for about Rs 1,066.63 crore.

The open offer would start on August 22, and would close on September 11.

The Idea-Spice deal would catapult Idea Cellular's market share to 11.1 per cent and more importantly would get the crucial spectrum on 900 Mhz band.

Shares of Idea Cellular were trading at Rs 87.35, up 1.93 per cent, while Spice Communications was quoted up 0.48 per cent at Rs 73.90.