Idea public float put on hold

Idea to replace Escotel acquisition debt with equity: Mehmi

Idea Cellular Ltd will replace the debt of acquisition of Escotel with equity. However the proposed IPO has been postponed for a weeks, said Vikram Mehmi, CEO, Idea Cellular Ltd.

Five circles of Idea Cellular have achieved a breakeven, Mehmi said. "We have already achieved a breakeven in five circles which include Goa and Maharashtra, Gujarat, Madhya Pradesh and Chhatisgarh, Andhra Pradesh and Delhi.

Idea has so far invested as much as Rs 6,000 crore in the services in the circles that it operates," said the Idea Cellular chief executive officer, who was in Gujarat last week to mark the occasion of Idea roping in a half million subscribers.

Commenting on the proposed IPO, Mehmi said that after AT&T backed out from the partnership, two companies STT and Telecom Malaysia have shown interest in picking up the 30 per cent share of AT&T in Idea Cellular. "It will just be a few weeks before the IPO will be floated," said Mehmi, who added that the IPO had to be put on hold as the shareholding pattern will now be changed.

"Idea will replace debt with equity, as the Escotel acquisition was by debt. Having applied and secured licences for three more circles of Rajasthan, Uttar Pradesh and Himachal Pradesh, the company will soon emerge among the leading telecom service providers in the country," Mehmi said.

Earlier in June this year, Idea Cellular announced that it had completed acquisition of Escotel Mobile Communications Ltd (EMCL) by acquiring 100 per cent shares from its promoters Escorts Telecommunications and First Pacific.

Idea had signed a definitive share purchase agreement with the sponsors of EMCL in January 2004 and now EMCL has become a 100 per cent subsidiary of Idea Cellular.

To complete the transaction, Idea has obtained approvals of all its existing lenders and replaced all the lenders of Escotel by raising Rs 450 crore through a project recourse loan from RABO bank and short-term loans from Bank of India, UTI Bank, HDFC Limited and non-fund based facilities from PNB.