The Hindu Business Line : Tatas, Birlas to buy out New Cingular's stake in IDEA for Rs 1,300 cr

THE Tata and A.V. Birla groups have agreed to jointly buy out New Cingular Wireless' 32.91 per cent stake in IDEA Cellular for $300 million (about Rs 1,300 crore).

IDEA is an equal joint venture between New Cingular and the Tata and A.V. Birla groups, and is the fifth largest wireless operator in the country.

This agreement comes after the Singapore Technologies Telemedia and Telekom Malaysia deal for 47.7 per cent stake in IDEA fell through last month, when it did not get permission from the Department of Telecom. New Cingular, like many a Western telecom operator, appears to have been in a hurry to exit India, to concentrate on other geographies.

"We sat together and decided on this, six weeks after the last deal was abandoned," said a source close to the deal. He said the Birlas and Tatas would equally buy out New Cingular.

A stock market announcement by Indian Rayon & Industries Ltd on Saturday said that New Cingular has offered to sell, under the right of first refusal clause of the shareholder agreement, its 32.91 per cent holding in IDEA to the remaining founder shareholders (A.V. Birla, Tata groups) for $300 million. The 74.35-crore equity shares would be sold for Rs 17.50 each.

The equity valuation of IDEA Cellular yielded by this is Rs 4,100 crore. This is more than the valuation of Rs 3,700 crore that was yielded by the failed agreement by IDEA promoters with STT and TMI.

STT and TMI had agreed to pay $390 million for 47.7 per cent stake in IDEA Cellular. They were to buy out New Cingular and also acquire part of the stakes of the A.V. Birla and Tata groups.

Indian regulators opposed it on the grounds that Temasek of Singapore already owns 63 per cent stake in Singtel, which owns 28 per cent of Bharti Tele-Ventures. No investor can own more than 10 per cent stake in two operations active in the same telecom circle.

"In the event, Tata Industries Ltd also accepted the offer, the number of shares to be acquired by the company and subsidiary will reduce to around 3,832 lakh shares," said the Indian Rayon announcement to the stock exchanges.

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