The Aditya Birla group, which is in talks to buy billionaire B K Modi-owned Spice Communications, may use Aditya Birla Telecom, a unit of Idea Cellular, to acquire the latter's stake. The Birla group will also offer stake in Aditya Birla
Telecom to Telekom Malaysia in an attempt to complete the merger, sources involved in the negotiations said, declining to be identified. The group has hired Enam Financial as adviser to the transaction.
"One of the options being discussed is to make ABTL as the vehicle for the acquisition," a banking source said. "This is to retain the Birla group's control over the listed Idea Cellular, where the Kumar Mangalam Birla-led group is the majority shareholder," he said.
Investment banking sources said the lawyers from both the parties are now busy structuring the deal so that the acquisition meets all the regulatory norms of the country and the Birlas retain control over Idea Cellular.
ABTL is a Universal Access Service Licence holder with permission to provide telecom services in the Bihar circle, comprising Bihar and Jharkhand.
The company currently holds a 16 per cent stake in the newly formed Indus Towers, a joint venture company between Idea Cellular, Bharti Airtel and Vodafone-Essar. Last month, the Birlas sold a 20 per cent stake in ABTL to Providence Equity Partners, a US buyout firm, for $640 million (Rs 2,560 crore).
Telekom Malyasia, which holds 39.2 per cent shares in Spice Communications, would be offered a stake in ABTL, advisers to the deal said. "This is an option with us, which we are seriously looking at," the source said.
Telekom Malaysia announced at the Kuala Lumpur Stock Exchange that it was "at all times in discussions with various parties" in pursuing its regional expansion.
"TM International is exploring various opportunities to expand in the South and South-East Asia mobile markets, including India, and is at all times in discussions with various parties in pursuance of this objective," it added.
The Malaysian company did not comment on the structure of the Idea deal, but its CEO Yusof Annuar Yaacob did not rule out merging its India assets with other players.
"Bringing in ABTL will not disturb the existing structure of Idea Cellular, which will continue to be quoted as an AV Birla Group company," the source said.
Even though there would be an open offer for Spice shareholders, this will not affect the equity structure of the listed Idea Cellular. Another reason for this structure, say banking sources, is that on acquisition Idea Cellular will have to sell off the additional spectrum that it will get in the Andhra Pradesh circle.
Spice has been recently granted 4.4 mhz of start-up spectrum that will come into the Idea fold on acquisition.
Idea already has 8.2 mhz of spectrum in Andhra Pradesh and serves only 3.55 million subscribers. This is against the new merger and acquisition norms of the Department of Telecommunications, according to which Idea needs to have 4.1 million subscribers for the 8.2 mhz GSM spectrum.
Getting Spice spectrum will increase the spectrum quantum to 12.6 mhz and Idea Cellular will look at selling it off to another company. This could also be easily done, if the acquisition takes place through the subsidiary.