Idea-Spice Tele merger gains steam

NEW DELHI: Even as both sides are dismissing the talk of a merger between Idea Cellular and Spice Telecom, it is believed that merchant bankers are on the job already.

Sources said that Idea Cellular may be represented by Merrill Lynch for the proposed deal. Although Lazard is learnt to be advising Spice Telecom, group chairman BK Modi told DNA Money, “Lazard is the general advisor to our company. We have not mandated anyone for the specific purpose of any deal. Spice Telecom is going ahead with its planned IPO.

Lazard is one of the advisors to Spice for the IPO, too. Recently, the Securities and Exchange Board of India (Sebi) had approved Spice Telecom’s IPO.

Idea Cellular CEO Sanjeev Aga refused to comment on the supposed merger between Idea and Spice.

Meanwhile, industry sources pointed out that the negotiations between Idea and Spice Telecom are at an advanced stage. “If the merger happens, Spice shareholders would own around 13-14% in the merged entity,” they said. Also, post-merger, the Aditya Birla group would have a controlling stake in the new entity, sources indicated.

Besides getting Spice Telecom’s subscriber base, Idea would also get to operate in two more significant circles, Punjab and Karnataka, in the event of a merger.

Idea is present in Delhi, Maharashtra, Gujarat, Andhra Pradesh, Kerala, Haryana, UP (west), UP (east), Rajasthan, Madhya Pradesh and Himachal Pradesh. Spice operates in Punjab and Karnataka.

While Idea has a wireless user base of 15 million across 11 circles, Spice has 2.8 million subscribers in two circles.