| The Singapore Technologies Telemedia and Telekom Malaysia consortium has called off its proposed deal to acquire a 47.7 per cent stake in Idea Cellular. | |
| The $390 million deal has been called off as the consortium did not get regulatory approvals. | |
| "The transaction has been called off since we have not secured the necessary regulatory approvals within the six-month period allowed by the sale agreement," STT said in a statement. | |
| Approvals from the department of telecommunications (DoT) and the Foreign Investment Promotion Board (FIPB) were not received by June 11, the deadline for closure of the deal. | |
| Industry sources said the DoT did not permit the STT-TMI combine to go ahead with the proposed acquisition as the existing rules do not permit any company to hold more than a 10 per cent stake in two telecom firms operating in the same circle. | |
| Singapore-based financial investment company Temasek owns a 65 per cent stake in STT, which controls 28 per cent in Bharti Tele-Ventures. Bharti and Idea have overlapping operations in a few circles. | |
| The consortium was to acquire a 33 per cent stake, currently held by Cingular Wireless (formerly AT&T), and the balance from the Tata and Aditya Birla groups. | |
| Presently, the shareholders hold one-third stake each in Idea. TMI is currently reviewing its available options in respect of its investment strategy in India and the region, the statement further added. | |
| When contacted, Idea Cellular Chief Executive Officer Vikram Mehmi said, "This is strictly a shareholder issue and I will not be able to comment on this." However, he added that business would be "as usual with Idea". | |
| A top Tata official said, "The STT-TM consortium's pullout will not hamper the business of Idea. The shareholders of the company will find out options to mobilise funds required." | |
| In an e-mailed statement, STT said that despite the setback, "India continued to be an important market" for it. | |
| Telekom Malaysia, Southeast Asia's second largest phone company, however said that "it was currently reviewing its available options in respect of its investment strategy in India and the region". | |
| DoT officials told Business Standard that the deal failed to get government approval as it would have resulted in Tamasek acquiring significant stake in two companies offering cellular services in eight common circles "" Delhi, Maharashtra, Andhra Pradesh, Gujarat, Kerala, Uttar Pradesh-West, Haryana and Madhya Pradesh. | |
| In a separate statement from Kuala Lumpur, Telekom Malaysia, said that "the proposed acquisition by TM International, part of a consortium with STT of 47.7 per cent of the enlarged equity interest in Idea, has lapsed in accordance with the terms of the transaction documents". | |
| With the consortium deciding to pull out, the US-based Cingular Wireless, the Tata Group and the Aditya Birla Group will continue to hold 33 per cent stake each in Idea Cellular, which is the fifth-largest mobile-phone company in India with 5.4 million subscribers. | |
| If the deal had been approved, the consortium would have bought out the the entire holding from Cingular, and 6.7 per cent and 8.3 per cent of the 33 per cent held by the Aditya Birla group and the Tata group, respectively. | |
| While the finance ministry was in favour of the move, the DoT had opposed the proposal on the grounds that its guidelines did not permit any player from holding over 10 per cent stake in more than one cellular operator in a circle. | |
| STT is wholly owned by Singapore-based Temasek Holdings, which also owns 63 per cent of Singapore Telecom (SingTel), which in turn is the largest shareholder in Bharti Tele-Ventures with a 29 per cent stake. | |
| Temasek also holds 5 per cent in Telekom Malaysia. TMI is the global investment arm of Telekom Malaysia.
| |
Explore Business Standard