Idea Cellular

Table of Content

1. Introduction 1

2. About the Companies 1

  2.1 Idea Cellular 1

  2.2 Spice Communication 2

  2.3 T M International 2

3.   Details of Deal 4

4.   Deal Chronology 4

5.   Benefits from the Deal 5

6.   Likely reasons for Spice promoter’s exit 10

7.   Benefits of TMI’s investment 10

8.   Deal Arithmetic 11

9.   Share Holding pattern of both the Companies Pre & Post Merger 12

10. Financial Highlights 13

11.   Conclusion 15

12.   References 16

INTRODUCTION

Idea Cellular, India's fifth-largest cellular services operator, has acquired the promoter, the Modi Group's, stake in Spice Communications, a regional operator with a presence in two circles, namely Punjab and Karnataka. Idea, along with Telecom Malaysia International (TMI) will now make an open offer for a further 20% stake in Spice, as required by Indian securities regulations. The combine will be the fifth-largest mobile operator in the country, with over 30mn subscribers, a presence in 13 circles with operations due to commence shortly in four more circles and a combined market share of over 11%.

The deal, while not leading to any changes in the pecking order in terms of market rankings (Idea standalone is the fifth-largest mobile operator, having overtaken Tata Teleservices in April 2008 and the Idea + Spice combine is also the fifth-largest operator, albeit a stronger one, behind BSNL), is the first sign of consolidation in the sector, which has seen very little over the past few years. However, it is believed this is just a small step towards consolidation and will not lead to any major moves by any operator, given the current market shares, the slim possibility of any of the top six operators being acquired by each other and the lack of presence of any other attractive telecom asset in the country.

About the companies

About IDEA Cellular... [continues]

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