The AV Birla group?s Idea Cellular Ltd has refused to sell any stake to Telekom Malaysia. According to sources, the tough stance of company chairman Kumar Mangalam Birla against aligning with a strategic player will surely come as a dampener to the Malaysian operator?s plans of becoming a pan-India player. It currently has a restricted footprint in merely two circles through a 39.2% stake in BK Modi-led Spice Communications.

Sources said Telekom Malaysia is willing to fork out as much as Rs 150 a share totalling around $2 billion for a 14.8% stake in the Birla company. On Friday, Idea Cellular?s shares gained 0.51% and closed at Rs 108.25 on an otherwise flat BSE. Idea?s market capitalisation amounted to Rs 28,527 crore at this price.

While there was no official confirmation from either side, industry sources said Telekom Malaysia is keen on a stake in Idea Cellular so that it too has a slice in the impending?and, potentially lucrative?Idea-Spice merger. The Malaysian firm has apparently been negotiating hard for a stake in Idea to ensure that Spice is merged with it following the acquisition, rather than run independently.

With a valuation more or less settled at around Rs 1,700 crore for BK Modi?s 40.8% stake in Spice, its acquisition by Idea Cellular could leave Telekom Malaysia in the lurch. ?Since Idea Cellular and Spice Communication currently don?t operate in any overlapping circles, an outright acquisition would not be barred by the crossholding norm, which prohibits a company from having more than a 10% stake in another telecom firm in the same circle,? said a source close to the Idea-Spice merger deal.

The source said, ?KM Birla isn?t very keen to merge the two entities. Idea?s current gamelan is to simply acquire Modi?s stake in Spice and become the controlling partner. This would give Idea a presence in the Punjab and Karnataka circles, where it currently has no presence.?

He added, ?However, Telekom Malaysia is aware that future growth would be routed through Idea Cellular and not Spice. This would stunt the Malaysian company?s plans for India and, so, it wants in on Idea so that it can ensure a merger.?