The Hindu Business Line : ST Telemedia-TM Intl to acquire 47.7 pc stake in Idea Cell

SINGAPORE Technologies Telemedia and TM International have announced that their consortium has signed definitive agreements for the acquisition of 47.7 per cent stake in Idea Cellular.

The total consideration of the deal is approximately $390 million (or over Rs 1,755 crore), said a joint news release from the consortium on Saturday.

The acquiring consortium is structured as a 60:40 joint venture between ST Telemedia and TM International (an international investment arm of Telekom Malaysia).

The size of the transaction puts the valuation of Idea Cellular at over $800 million or over Rs 3,600 crore. This is line with the ongoing valuation in the industry currently, said a senior official with the Aditya Birla group.

The $390-million deal consists of the acquisition of Cingular Wireless' entire 32.9-per cent stake in Idea as well as $190 million of fresh capital infusion by the consortium.

On account of this infusion, the Aditya Birla and Tata groups' stakes in Idea Cellular will now stand reduced to 26.3 per cent and 24.7 per cent respectively. Earlier, they had stakes of 34 per cent and over 31 per cent, respectively, with American financial conglomerate AIG holding around 1.3 per cent stake.

AIG will continue to hold this stake in Idea Cellular for now, said sources close to the deal.

Upon completion of the transaction, expected in the first quarter of 2005, the consortium will become the single largest shareholder of Idea, with its 47.7 per cent stake. Indian shareholders will continue to collectively own a majority 51 per cent stake.

"In addition, the consortium and the Indian shareholders have entered into an option agreement that enables Tata Industries and the Aditya Birla group to sell and the consortium to purchase their shares in Idea in the future, subject to certain conditions being met," said the news release.

This points to the possibility that Aditya Birla's group wants to exit from telecom and the Tatas' priority is Tata Teleservices which runs CDMA services, said sources close to the deal. Whatever interest they have now would be almost be akin to that of a financial investor, he said.

Western companies are moving out of Indian telecom while Asian companies are moving in to take their place, noted a senior official with one of the Indian stakeholders in Idea Cellular.

"The proposed investment is consistent with the objectives of both ST Telemedia and TM International - to become significant wireless players in the Asian markets, and to participate in the Indian cellular market," said the news release.

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