Aditya Birla has a bright Idea; buys Tata out of joint venture

11 Apr 2006

After a stand-off lasting several months, India’s Aditya Birla Group has agreed to buy the stake in GSM mobile operator Idea Cellular held by Tata Group for almost USD1 billion. Under the terms of the agreement, Birla will purchase Tata’s 48% stake in Idea for USD969 million, raising its own stake in the mobile operator to 98%. Tata has long been looking to exit the venture to concentrate on its competing CDMA-based mobile business Tata Teleservices and the deal puts an end to an increasingly acrimonious partnership that has seen each investor accusing the other of licence violations and abuse of competition regulations.

Originally known as Birla Tata AT&T Communications after its three major investors, the cellco launched GSM services in Gujurat in January 1997. Renamed Idea in May 2002, Cingular Wireless of the US acquired a stake in Idea via its takeover of AT&T Wireless in late 2004 and put it up for sale. In July 2005 Tata and Aditya Birla agreed to buy equal parts of Cingular’s 32.91% stake for a total of USD300 million and by the end of the year Idea had cemented its position as India’s fourth GSM provider and fifth largest mobile operator overall, with operations spanning eight circles including Andhra Pradesh, Madhya Pradesh, Delhi, Kerala, Haryana and Uttar Pradesh (West).