With the AV Birla group?s Idea Cellular entering into a fresh round of negotiations with Spice Communication chairman BK Modi over the valuation of his stake in Spice Telecom, a buyout deal is expected to be sealed at Rs 1,700 crore.

?Idea is now willing to pay a premium of 10-15% over the current share price of Spice Communication, taking the valuation of Modi?s 40.8% stake in the company to Rs 1,700 crore from the earlier Rs 1,500 crore,? said a source close to the development.

The revised valuation matches Modi?s earlier quote of Rs 60 a share, the deal-making price he had originally in mind, according to the source.

Indeed, Modi told media persons at the Spice Communication AGM last week that he was willing to exit at this price.

Spice Communication stock closed 4.14% up at Rs 55.40 on the BSE on Tuesday. At this level, the company had a market capitalisation of Rs 3,822.18, while Modi?s stake was valued at 1,559 crore. Idea?s shares fell for the second consecutive day, down 1.90% on Tuesday to close at Rs 99.65.

When talks between the two had begun for Modi?s stake, Idea had quoted an initial price band of Rs 50-55, while Modi wanted Rs 70 a share.

Idea had initially bid Rs 1,500 crore for Modi?s stake, while he had asked for Rs 2,000 crore. Over the week in response to other companies evincing interest, Modi is believed to have subsequently increased his valuation by almost 30%, asking for as much as Rs 80 a share.

Idea is currently present in 11 circles with over 24 million subscribers. The company will soon roll out operations in Mumbai and Bihar. Spice, with subscriber base of more than 3 million, is currently operational only in Karnataka and Bihar.

Spice Communication, which went public last year, failed to obtain an all-India GSM operation licence last year since it did not meet the net worth criteria. Spice Communications was, however, allotted licences for four circles. The company, which is going through a serious financial crunch, cannot raise any further debt for expansion, since it is already running a high debt-equity ratio.