Telekom Malaysia buys 49% in Spice

Telekom Malaysia Berhad (TM), Malaysia's largest telecom company, will acquire a 49 per cent stake in GSM service provider Spice Telecom for $178.8 million (approximately Rs 800 crore) in cash.

TM will acquire the Mauritius-based Distacom India Holdings Ltd (DIHL), which holds a 49 per cent stake in Spice Telecom. The BK Modi family will continue to have a 51 per cent stake in Spice Telecom.

This acquisition will help TM to foray into the Indian market, the second largest telecom market in the world after China, after an abortive attempt to acquire a stake in Idea Cellular.

In a statement to the Malaysian stock exchange, Bursa Malaysia, the company said, "TM International, a wholly owned subsidiary of TM, has entered into a share purchase agreement to acquire the entire issued and paid-up share capital of DCIL for $178.8 million."

The acquisition is expected to be completed within one month. The company is looking at building a "leading cellular company in India," the statement said.

TM International will not assume any liabilities of Spice Telecom and the acquisition will be funded through accruals and borrowings. The deal was subject to regulatory and shareholder approval, it said.

In January 2006, Spice Telecom had a subscriber base of over 1.7 million. It operates in Punjab and Karnataka with a 12.9 per cent share of the national market.