Idea Cellular to help Modi's exit from Spice Communications

07 June 2008

Mumbai: The AV Birla group telecom company Idea Cellular is acquiring the stake of the Modi family in the Modi Group's telecom company, Spice Communications, and will end up being the majority partner once the deal closes.

Once it acquires the 40.8-per cent stake of the Modis in Spice, Idea will have to make a mandatory open offer for 20 per cent of Spice Communications.

The Modis were reported to be looking for options to exit their telecommunications venture, Spice Communications, having been denied a pan-India license on account of the company's unfavourable economic position. (See: Spice Communications looking at options)

Spice Communications was looking at Telekom Malaysia raising its stake to 74 per cent from the current 39.2 per cent. Spice was also open to the UAE-based Etisalat and others buying a stake in the company, as the company's chairman B K Modi had earlier said.

The Modis were earlier reported to be in a three-way discussions involving  partner Telekom Malaysia Bhd, Japan's NTT DoCoMo Inc and local firm Idea Cellular Ltd for the stake sale, sources said. Telekom Malaysia, Etisalat and NTT DoCoMo are partners in some telecom markets.

Reports had indicated that Telekom Malaysia too wanted to acquire the Modis stake and thereafter explore the possibility of merging the company with Idea Cellular.