The Hindu Business Line : Spice Comm revives merger talks with Idea Cellular

New Delhi, June 3 Reviving the possibility of a merger with Idea Cellular, Spice Communication’s Chairman, Mr B.K. Modi, said that he was in talks with the Aditya Birla Group to explore merging the two entities. The two companies had initially begun discussions a year ago but the deal could not be closed due to issues related to valuation.

Mr Modi on Tuesday said that the two companies are talking again as a merger could lead to a strategic fit. If the deal goes through this time it will create the country’s fifth largest mobile entity. While Spice has operations in two circles, Idea Cellular has services in 11 circles.

Both companies had applied for pan-Indian licences and spectrum for rolling out mobile services to expand their footprint. While Idea Cellular has received more licences and spectrum, Spice’s application was rejected by the Department of Telecom. Therefore a merger with Idea Cellular is a good option for Spice to become a pan-Indian operator.

The merger talks may go through this time because Telekom Malaysia, which holds 39.3 per cent stake in Spice, is keen to get a national presence to compete more effectively with the likes of Bharti Airtel, Reliance Communications and Vodafone.

Subscriber base

While Spice has 4.3 million subscribers in Karnataka and Punjab, Idea Cellular has 24 million subscribers in Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh, Delhi, Kerala, Haryana, Uttar Pradesh (east) and (west), Rajasthan and Himachal Pradesh.

The Modi Group and Telekom Malaysia hold 40.8 per cent and 39.3 per cent stake in Spice, respectively. Mr Modi said that he was open to Telekom Malaysia raising its stake to 74 per cent in the company. He also said that the Modi Group was also open to Etisalat having a stake in Spice.

The UAE based telecom player Etisalat had earlier said that it was in talks with TM for picking up a stake in Spice Communication. Mr Modi said that since TM partners Etisalat and NTT DoCoMo in other markets, they may want to bring the two companies into Spice as part of the deal (for taking stake to 74 per cent). Mr Modi, however, said that for any deal, the buyers will have to pay at least Rs 60 a share for the stake. Spice Communication’s shares closed at Rs 57 on the BSE on Tuesday. Idea Cellular did not offer any comment.