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AT&T sells Idea stake for $200m

Singapore Tech-Telekom Malaysia combine to pick 33% stake

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Our Corporate Bureau Mumbai
AT&T will be selling its 33 per cent stake in Idea Cellular to the Singapore Technologies Telemedia (STT) and Telekom Malaysia combine for over $200 million. The transaction values the Pune-based cellular company at over $600 million.
 
Idea Cellular is an equal joint venture between AT&T, Tata group and A V Birla group holding 33 per cent each, with the balance 1 per cent stake held by AIG.
 
STT holds over 50 per cent stake in StarHub Ltd, Singapore's second-largest telecom company. The two foreign companies have formed a holding company to acquire AT&T's stake, Vikram Mehmi, chief executive, Idea Cellular, said. However, their holding in the special purpose vehicle could not be ascertained.
 
This is the second instance of a Singapore-based company investing in the country's telecom sector. Earlier, Singapore Telecommunications had picked up about 28 per cent equity in Bharti Tele-Ventures Ltd.
 
Globally, AT&T is restructuring itself after the takeover over by Cingular Wireless. It is learnt that STT and Telekom Malaysia would raise their combined stake to 49 per cent, the maximum allowed under the FDI cap on telecom. This, in turn, would result in a fall in the stakes of the Birla and Tata groups.
 
The shareholding in Idea Cellular will undergo a further change in the future as the Birla and Tata groups too are keen on selling their shareholding in the venture.
 
The Tata group has been focusing on code division multiple access technology through Tata Teleservices.
 
The Birlas want to get out of telecom business at "right price" as it does not consider it to be its core area.
 
Idea Cellular expects a 50 per cent growth in its revenues in 2004-05. For, the current fiscal, the company is targeting gross revenues of Rs 2,000 crore.
 
Idea has about 3.86 million customers after it recently bought out smaller rival Escotel Mobile Communications. It is also in talks to pick up Aircel.

 
 

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First Published: Jun 02 2004 | 12:00 AM IST

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