The management of the merged entity will be with the Birla group, which will have between 46% and 48% in the company. The 40.8% Spice Telecom stake being acquired by Idea from the BK Modi Group will be cancelled, post the transaction.
DSP Merrill Lynch acted as the financial advisor to Idea, while Enam Securities worked for Modi. Lazard was the financial advisor to TMI.
The deal makes Idea virtually a debt-free company because of the net gain of around Rs 4,500 crore from the deal. Around Rs 2,700 crore was raised by selling stake in Indus Towers to Providence Partners last month. With this, we become a debt-free company and Idea takes on a high growth trajectory, said Mr Birla.
Idea Cellular managing director, Sanjeev Aga, told ET the deal will give Idea an entry into Punjab and Karnataka, where Spice is present and which accounts for 11% of Indias total wireless subscribers.
Spice has 4.4 million subscribers. With a total of over 31 million subscribers post-merger, Idea will be the fifth largest operator in India, ahead of Tata Teleservices (TTSL) which has nearly 26 million users.
It will also consolidate Ideas position, with its all-India market share increasing from 9.5% to 11.1%. Idea is close to launching operations in Mumbai, Bihar, Tamil Nadu and Orissa in the next four-five months. With Punjab and Karnataka coming into its kitty through the deal, Idea will have almost a nation-wide footprint spanning 17 key circles.
Also, Spice has spectrum in the 900 MHz GSM band, which carries more subscribers than the 1,800 Mhz band. Idea already has spectrum in the 900 Mhz band in seven circles areas, which will increase to nine, driving scale economies and operational synergies.
This will result in lower operating and capital expenditure, said Mr Aga.
TMI has 44 million users across 10 Asian markets. TMIs experience of operating 3G in similar markets will be of value to Idea, as also the convergent interests of the two companies in areas extending from international traffic to roaming and mobile value added services. Idea and TMI would sign a business co-operation agreement to this effect, Mr Aga added.
Spice group chairman BK Modi said, This divestment will enable Spice to redeploy resources and strengthen the groups mobile ecosystem businesses led by mobile VAS, mobile devices, telecom retail and customer support.