Aditya Birla reduces Idea stake to 65%

7 Nov 2006

UK-based independent asset manager GLG Partners has acquired an 8% stake in India’s Idea Cellular from Aditya Birla Group, the company said in a statement. The terms of the transaction were not disclosed, but the value of the deal is thought to be worth around USD213 million. Birla has been offloading stakes in Idea since acquiring Tata Group’s 48.14% stake in the cellco for USD969 million, raising its own indirect holding to 98.3%. It sold a 15% share in Idea to US-based Providence Equity Partners for an estimated USD400 million two weeks ago, and followed this up with the sale of a further 10% to ChrysCapital, TA Associates and Citigroup. Upon completion of all the deals, Birla will hold 65% of Idea. It is not expected to dilute its stake further before launching an initial public offering (IPO) next year.

According to TeleGeography’s GlobalComms database, Idea launched GSM services in Gujurat in January 1997. Originally known as Birla Tata AT&T Communications after its three major investors, the cellco was renamed Idea in May 2002. Cingular Wireless of the US acquired a stake via its takeover of AT&T Wireless in late 2004 and put it up for sale. In November Telekom Malaysia and Singapore Technologies Telemedia (ST Telemedia) agreed to buy the shares, but the deal was spiked by the Indian government, citing infringements of regional cross-holding regulations. Finally, in July 2005, after months of negotiations, existing Idea shareholders Tata Group and Aditya Birla Group agreed to buy equal parts of Cingular’s 32.91% stake for a total of USD300 million. The deal brought Tata’s holding in Idea to a little over 48% and Birla’s to just over 50%, and included the provision for Birla to take the entire stake if Tata fell foul of the same regulations that halted the Singapore-Malaysian buyout bid due to its existing telecoms interests. Idea’s licence footprint covers 60% of India’s population and it has more than ten million mobile subscribers and operations in Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya Pradesh, Chhattisgarh, Uttaranchal, Haryana, Upper Pradesh (East and West), Kerala, Rajasthan and Himachal Pradesh.

India, Vi (Vodafone Idea Limited, VIL)