Idea Cellular plans Rs 2,301 crore expansion

New Delhi, Feb 7 (UNI) Aditya Birla Group's Idea Cellular will invest Rs 2,301 crore on starting operations in Mumbai and Bihar and strengthening services in places where it currently operates.

The company, the country's fifth largest wireless service provider, received the license from the Department of Telecom to start operations in Mumbai and Bihar in December 2006 and is likely to roll-out services in these circles by the end of 2007.

''We are presently in the process of preparing a business plan and will issue tenders for network set up soon,'' company's Chief Operating Officer Himanshu Kapania told reporters here today.

The company will invest Rs 650 crore in the first year to set up the telecom network in Mumbai, he added.

Idea currently operates in 11 circles including Himachal Pradesh, Rajasthan and Uttar Pradesh (East), where it rolled out its services late last year. It has a total subscriber base of 12.44 million.

''We have planned expansion of our operations in these circles and will install more cell sites,'' Mr Kapania said.

The company has already invested Rs 603 crore in obtaining the license for national long distance operations and in the intial phase of expanding its network in Himachal Pradesh, Rajasthan and UP (East).

To fund its expansion plans, the company is coming out with an initial public offering (IPO) to raise Rs 2,125 crore on February 12. The issue will close on February 15.

The price band for the fully book-built issue has been fixed at Rs 65-Rs 75, valuing the company at about Rs 20,250 crore at the upper end of the price band.

The company has recently concluded a pre-IPO placement of Rs 375 crore to its promoters, directors and high networth individuals.

''This includes Rs 225 crore from Aditya Birla Nuvo Ltd and Rs 137 crore from Birla TMT Holdings Pvt Ltd -- both existing promoters of the company,'' said Mr Mayank Jain of JM Morgan Stanley, which is the lead manager of the issue alongwith DSP Merill Lynch, Citigroup Global Markets and UBS Securities.

Equity shares aggregating Rs 50 crore are reserved for employees, with the balance of Rs 2,075 crore being the net issue available for allotment to the public. The company also proposes a green shoe option not exceeding Rs 318.75 crore in excess of the equity shares that are included in the issue.

The issue, with the green shoe option, aggregates Rs 2,443.75 crore.

Of the net issue to the public in India, 60 per cent shall be allotted to qualified institutional buyers (QIB). Within the QIB portion, five per cent will be available for allocation to mutual funds, not less than 10 per cent will be allocated to non-institutional bidders and the balance, not less than 30 per cent, will be allocated to retail investors.

UNI