Idea to buy 40.8 per cent in Spice Communications for Rs3,240 crore

25 June 2008

Mumbai: Idea Cellular Ltd will buy a 40.8 per cent stake in Spice Telecom from MCorpGlobal Communications Pvt Ltd at Rs77.30 a share for a total of Rs3,240 crore and make an open offer for a further 20 per cent at the same price.

Idea, the fifth-largest mobile-phone operator in the country, has also agreed to pay MCPL an additional Rs544 crore as non-compete fee.

Post acquisition, Idea plans to sell 464.7 million shares of the combined company at Rs156.96 a share to Telecom Malaysia Bhd, Malaysia's second-largest wireless carrier.

Telekom Malaysia, which holds 39 per cent in Spice, would hold up to 20 per cent stake in the combined entity after preferential issue of a 14.99 per cent additional stake at about Rs7,500 crore, Idea chairman Kumar Mangalam Birla said. The Malaysian company would also get a seat on Idea's board, he added.

Birla said that the net inflow of about Rs4,500 crore after the preferential offer would make Idea a debt-free company.

Sanjeev Aga, the managing director of Idea Cellular, said that the company expects Spice to delist in six months. Spice Communication would get delisted once the open offer is completed.