Almost a year after the talks between Idea Cellular and Spice Telecom failed, the companies are again close to a deal. On Thursday and Friday, BK Modi and Kumar Mangalam Birla?s teams were working to narrow the differences on valuations. While BK Modi, chairman, Spice Communication, has quoted a price of Rs 2,000 crore, Idea wants the deal at Rs 1,500 crore.
According to sources, Modi, who holds an equity stake of 40.8% in Spice Communications, wants to sell his majority shareholding in the Rs 1,000-crore Spice Telecom at Rs 70 per share. But Idea Cellular, the country?s fourth largest GSM player, has stuck to a valuation of Rs 50-55 per share.
It is learnt that Telekom Malaysia, which holds 39.2% equity in Spice Telecom, has given a go-ahead for the deal to Idea. Sources said that Telekom Malaysia would also get cash compensation if the deal falls through. However, no company officials were available to confirm the position.
Sources close to the development said that if the deal sails through, Telekom Malaysia would get a share holding in the new entity proportionate to its holding in Spice Communication, the holding company for Spice Telecom.
On Tuesday, BK Modi had said that he was willing to sell his stake in the company, provided he got a minimum valuation of Rs 60 per share and that he was open to selling his stake to Telekom Malaysia as well. Idea shares closed at Rs 105 on the National Stock Exchange on Friday, while Spice closed at Rs 51.95, both down by approximately 2%. Idea Cellular is currently present in 11 circles while it is shortly going to roll out its operations in Bombay and Bihar. The deal, if falls in place, will give Idea footprints in Punjab and Karnatka.
Spice Communications, which went public last year, currently operates in only two circles of Punjab and Karnataka. It was rejected a pan-India GSM operation licence last year since it did not meet the net worth criteria and was allotted licences for only four circles.
