AT&T Stake: Idea To Select From Six Bidders This Week

Mumbai | Updated: May 27 2004, 05:30am hrs
The board of Idea Cellular will meet over the next couple of days to take a decision on who will acquire the 33 per cent stake in the company which is currently being held by AT&T Wireless. There have been six players who have evinced interest in AT&Ts stake, which is valued at about $200 million (approximately Rs 900 crore).

Sources familiar with the matter said a decision would be announced by the end of this week. Among the prominent bidders are Telekom Malaysia, Singapore Technologies Telemedia (STT) and Temasek.

While the name of Aircel promoter C Sivasankaran is also doing the rounds, there is no confirmation on his interest. The other bidders are from the Asia Pacific region. It is almost certain that Bharti Televentures has not put in its bid for buying AT&Ts stake. Senior officials at Idea Cellular declined to comment on the issue.

Idea Cellulars equity capital is approximately Rs 2,700 crore; AT&Ts 33 per cent holding is hence valued at $200 million. The Tatas hold 31.85 per cent of the equity, while the Birlas hold 33 per cent. The remaining equity of about 1.85 per cent is held by AIG. Idea Cellulars balance sheet is said to have a debt of around Rs 4,500 crore placing the companys enterprise valuation at about Rs 6,000 crore ($1.5 billion).

AT&T Wirelesss stake in Idea Cellular has been on the block ever since it was acquired worldwide by Cingular Wireless. The mandate for this was given to Deutsche Bank. AT&T initially held a 49 per cent stake in Birla AT&T. Post the merger of Birla AT&T with Tata Cellular to create Idea Cellular, AT&Ts stake in the merged entity was 33 per cent.

After AT&T Wirelesss recent acquisition by Cingular, international reports have suggested that India is today a key market and the company was keen on exiting its investment in Idea Cellular. In fact, it was only a few months ago when AT&T Wireless sold its other investment in India - a 49 per cent holding in BPL Cellular, which was sold to the Indian partner.

It still is not very clear who among the bidders has the edge. Telekom Malaysia has already had a cellular investment in India; it held a 49 per cent stake with Usha Martin in the Kolkata cellular circle before the operation was acquired by Hutch.

Telekom Malaysia is a significant player in the Malaysian wireless market with a 45 per cent stake in the company being held by the government. STT is the telecommunications arm of the Singapore Technologies (ST) group, apart from being its subsidiary. The other bidder from Singapore Temasek Holdings is one of the largest investment holding companies in Singapore, comprising holdings in industries that include transportation, finance, telecommunications and engineering.

Idea Cellular, on its own, has a subscriber base of four million in India.