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Idea shelves borrowing plan on DOT objection

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Anindita DeyHemangi Balse Mumbai
A consortium of banks has put on hold Idea Cellular's borrowing plan following the objection raised by the Department of Telecommunications (DoT) over Singapore Technologies Telemedia (STT) and Telekom Malaysia International (TM International) picking up 47.7 per cent stake in the company.
 
Idea Cellular has been planning to raise Rs 5,000 crore through a mix of rupee borrowing and foreign currency debt.
 
Sources in the banking circles said Idea Cellular intends to raise around $ 150-160 million through external commercial borrowing (ECB) and the rest will be in the form of domestic rupee debt.
 
"The entire borrowing of Idea Cellular is contingent upon the investments plans drawn by STT and TM International," they added.
 
When contacted, Vikram Mehmi, CEO of Idea Cellular said, "The application for change in shareholders is with the government and Idea will not comment on speculative reports." He also mentioned that Idea Cellular Ltd achieved financial closure a year ago.
 
The consortium of bankers includes State Bank of India, ING Vysya, IDBI and Development Bank of Singapore.
 
Last month the DoT had raised objections on investment plans of STT and TM International in Idea Cellular which resulted in Foreign Investment Promotion Board (FIPB) not clearing the proposal.
 
The Singapore-based Temasek Holdings owns STT and has 63 per cent holdings in TM International.
 
It also holds 63 per cent in Singapore Technologies which is the largest shareholder in Bharti Tele-Ventures.
 
DoT has pointed out that if STT and TM International pick up the equity, Temasek will have a equity in two companies which offer GSM services in eight common circles. This will also lead to monopolistic behaviour by the operator.
 
Executives in the banking circles said telecom is a risky sector for lending. "In this case, the borrowings is for expansion of telecom network by the service operator. The entire expansion plan is in turn contingent upon the foreign investment. Therefore, the debt raising proposal will be reviewed only when the company gets a nod from FIPB for any foreign investments," they pointed out.
 
STT and TM International had signed a deal to pick up Cingular Wireless' stake in Idea Cellular for $ 390 million. The other promoters of Idea Cellular are the Tata group and the A V Birla group.

 
 

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First Published: Apr 15 2005 | 12:00 AM IST

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