Private equity firm Providence Equity Partners has bought 16% in Idea Cellular for $400m (approx Rs 1,850 crore), securing a foothold in the fastest-growing telecom market in the world.
The US-based firm, which had almost clinched a deal with C Sivasankaran’s Aircel last year, has paid around Rs 51 per share to the AV Birla-owned telco for the stake, sources told ET. The sale is at a premium to the Rs 40.50 that the AV Birla group paid to the Tatas for their 48.14% stake in June this year. It values Idea at about $2.5 bn or Rs 11,500 crore versus the Rs 9,152 crore at the time of the Tata transaction.
Idea is the sixth-largest wireless operator in the country with a subscriber base of over 10m. The Indian telecom market is worth about Rs 65,000 crore and the growth of wireless telephony has been rapid.
Sanjeev Aga, managing director of Aditya Birla Nuvo, which holds 35.7% in Idea, refused to comment on the matter. “I won’t comment. Whenever the deal is done, we will make an announcement,” he said. The Birlas own 98.3% in Idea, with Aditya Birla Nuvo holding 35.7%, Birla TMT Holdings 44.9%, Grasim 7.5%, and Hindalco 10.1%.
People close to the transaction said that the AV Birla group would sell the remaining 17% in small lots to a clutch of funds.
Citigroup Venture Capital is believed to be one of them. But the two sides have not yet reached an agreement. Idea is also considering an initial public offer (IPO) early next year. According to sources, DSP Merrill Lynch and JP Morgan are advising the company on the IPO.
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