The Hindu Business Line : STT, Telekom Malaysia plans fail to get approvals

THE Singapore Technologies Telemedia (STT) and Telekom Malaysia (TMI) consortium on Monday said that they were pulling out of the agreement for acquiring a 47.7 per cent stake in Idea Cellular.

The two companies had last year expressed their intention to pick up the stake held by US telecom major AT&T (now Cingular Wireless) for about $390 million. However, the proposal ran into rough weather with the Department of Telecom (DoT) raising objections to the deal on the ground that the same company could not hold more than a 10 per cent stake in two operating companies in the same telecom circles.

Idea has common areas of operations with Bharti Tele-Ventures in which Singapore Telecom holds nearly a 28 per cent stake. DoT had said that since STT and SingTel had Temasek Holdings as the common promoter, the proposal by STT and TMI to invest in Idea could not be accepted.

Earlier, a similar proposal from Hutchison to acquire a stake in Tamil Nadu-based Aircel was grounded after objections from DoT. In a statement issued on Monday, STT said, "It is with deep regret that the transaction has been called off, since we have not secured the necessary regulatory approvals within the six-month period allowed by the sale agreement. "India continues to be an important market to ST Telemedia and we look forward to exploring other opportunities in future. Over the past few months, the consortium, together with Idea, has worked diligently and closely with the Indian government officials to address every matter that has been discussed."

In another statement, TMI said, "Telekom Malaysia Berhad wishes to announce that the proposed acquisition by TM International, a wholly-owned subsidiary of TM, as part of a consortium with ST Telemedia, of 47.7 per cent of the enlarged equity interest in IDEA has lapsed in accordance with the terms of the transaction documents."

The agreement had specified June 11, 2005 as the cut-off date to close the deal. However, the DoT and the Foreign Investment Promotion Board of India had not cleared the proposal. STT is a 100 per cent subsidiary of Temasek, an equity fund that manages the Singapore government's investments. Temasek also owns 65 per cent of Singapore Telecom, which, in turn, owns a 28 per cent stake in Bharti Tele-Ventures.

The proposed acquisition of the 47.7 per cent stake included the 33 per cent stake of Cingular Wireless (earlier held by AT&T) and the balance from the Tatas and the Birlas. Idea officials did not comment on the development but said that discussions were on with other strategic investors.

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