The Hindu Business Line : Idea Cellular capex plans in a limbo

Idea Cellular, caught in the midst of a dispute between the Tata and AV Birla groups, is not able to proceed with its capital raising and debt restructuring plans.

There was a "capital call" recently for between Rs 300 crore and Rs 400 crore for its capex requirements which would have been part of the equity contribution from the shareholders, said a source associated with the corporate.

But this fetched no response with one of the major shareholders refusing to oblige, he said.

In addition, the project debt of around Rs 4,000 crore needs to be restructured, he said. A consortium of banks led by IDBI is in charge of this. Originally too, the company's debt had been arranged by the IDBI-led consortium. The consortium is likely to see some minor changes, but no decision can be taken because of the dispute , he said.

The equity contributions from the Tatas and the Birlas amount to around Rs 2,500 crore, he added.

Despite its small footprint, Idea has been operating reasonably well and putting off its financial needs could dampen the company's expansion within its existing circles, he said. Also, it has been unable to expand into new circles.

Since Tata Teleservices has been applying for licenses in several circles where Idea is already in operation through 2003 and 2004, the dispute should have arisen much earlier, said a telecom analyst. That both are present in some circles is hardly anything new, he said.

The Tata group officials have always been saying that the Tatas' interest is in Tata Teleservices and that Idea is now a mere financial investment. This means that they are not unwilling to exit, he said. Obviously then they want to get the best deal when they exit.

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