Mumbai: Idea Cellular Ltd will buy a 40.8 per cent stake in Spice Telecom from MCorpGlobal Communications Pvt Ltd at Rs77.30 a share for a total of Rs3,240 crore and make an open offer for a further 20 per cent at the same price.

Idea, the fifth-largest mobile-phone operator in the country, has also agreed to pay MCPL an additional Rs544 crore as non-compete fee.

Post acquisition, Idea plans to sell 464.7 million shares of the combined company at Rs156.96 a share to Telecom Malaysia Bhd, Malaysia's second-largest wireless carrier.

Telekom Malaysia, which holds 39 per cent in Spice, would hold up to 20 per cent stake in the combined entity after preferential issue of a 14.99 per cent additional stake at about Rs7,500 crore, Idea chairman Kumar Mangalam Birla said. The Malaysian company would also get a seat on Idea's board, he added.

Birla said that the net inflow of about Rs4,500 crore after the preferential offer would make Idea a debt-free company.

Sanjeev Aga, the managing director of Idea Cellular, said that the company expects Spice to delist in six months. Spice Communication would get delisted once the open offer is completed.

``The divestment from Spice Communications is a very significant strategic decision for the group. This divestment will enable Spice to redeploy resources and strengthen the group`s mobile ecosystem businesses led by mobile VAS, mobile devices, telecom retail and customer support. This transaction makes Spice an operator agnostic services provider, where we will continue to provide services to the Indian mobile telephony market. It also gives us the opportunity to strengthen relationships with Idea Cellular and Telekom Malaysia International as partners in India and Asia Pacific respectively,`` Spice group chairman B K Modi said.

``We have also taken this decision in the best interest of our shareholders, providing exceptional value in terms of returns when compared to other key market benchmarks. I am excited about the upcoming opportunities for Group Spice where we will continue to deliver value to shareholders and customers alike,'' Modi added.

The combined entity will have about 30 million subscribers in the market of 269 million users, according to Telecom Regulatory Authority of India.

Idea, in fact, has been adding more subscribers than larger rivals Bharti Airtel and Vodafone Group Plc, according to data available with the TRAI.

The Aditya Birla group firm expects the Spice deal to add about 4.5 million customers and push it into a high-growth trajectory.
 
Idea will start operations in four new circles, including Mumbai and Tamil Nadu, and invest Rs10,000 crore for expansion in the next two-three years, Birla said.

India, which overtook the US as the second biggest cellphone market after China in April, expects the number of mobile-phone subscribers in the country to 500 million in two years.

Enam Securities and Lehman Brothers acted as the financial advisers to MCPL while Gibson, Dunn & Crutche and A & M Law Office acted as legal advisors.