Idea Offloads 16.4% stake, not 20% on Providence deal

   Print    Email

Email To		[Close]
		You must make entries in all fields
Your Email
Your Name
Send to Email
		Send

Aditya Birla Telecom (ABTL), a wholly owned subsidiary of Idea Cellular, has scaled down its $640 million (Rs 2,560 crore) deal with the US-based private equity major Providence Equity Partners.
Idea Cellular had announced the largest private equity deal involving a single entity in May 2008, subject to approval from the Foreign Investment Promotion Board.

But the company has offloaded only 16.14 per cent stake as against the earlier agreed 20 per cent for around $428 million (Rs 2,100 crore) as FIPB gave only a partial approval. Idea Cullar had said in May last year that the funds will be used for network rollout and ongoing operations of Aditya Birla Telecom, which has a license in Bihar. The scaled down deal would mean that the company would have less to spend on its expansion.

Last month, a subsidiary of Providence subscribed to around 2 million compulsorily convertible preference shares of ABTL. The shares will be converted into 16.14 per cent of equity share capital of the company.

When contacted by Business Standard, Idea Cellular Managing Director Sanjeev Aga confirmed the development. “We had applied for FIPB approvals for the deal and according to our application 16.14 per cent was to be acquired by Providence Equity Partners and the remaining by certain assignees (companies or persons associated with the acquiree).

However, even though FIPB approved the deal, acquisition of stake by assignees were not approved,” Aga said.
He, however, denied that there is a fall in valuation. “We are selling 16.14 per cent for the earlier agreed deal. Our expansion plans will also go as per schedule,” he added.

Pursuant to the deal, Idea Cellular planned to transfer its 16 per cent stake in Indus Towers — a telecom tower joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular — to ABTL. With over 70,000 towers in its portfolio, Indus is the largest independent tower company in the country. AV Birla Group holds 57.69 per cent stake in Idea Cellular, the country's fifth-largest telecom operator.

Global corporates own 28.4 per cent, foreign institutional investors 7.7 per cent, 2.9 per cent by individuals and the remaining is held by public.