Major consolidation in telecom as Spice merges with Idea

New Delhi, May 30 (UNI) Spice Telecom and Idea cellular today completed the formalities for their union, giving credence to media reports of possible merger between the two companies.

The formal announcement to this alliance will be done soon, a TV channel said.

With this merger a major consolidation in the telecom sector has taken place.

Spice telecom's shareholders will hold 12 per cent stake in this merged entity, the channel added.

Spice telecom, valued at Rs 4,500-5,000 crore, wanted to float IPOs in June or July this year and has revenues of Rs 1,000 crore.

Against Idea's nearly 15 million subscribers, Spice has just 2.8 million subscribers. While Idea is the sixth largest cellular operator after Airtel, Reliance Communications, BSNL, Hutchison Essar and Tata Teleservices, Spice is the eighth largest.

Idea and Spice jointly have a 10.5 per cent market share in the country's 165-million-strong mobile telephony market. With this merger, the new company will be the country's fifth largest cellular service provider.

Before the merger there were reports on the option of both Spice buying out Idea Cellular as well as the Birlas-owned Idea Cellular buying out Spice.

Telekom Malaysia, which holds 49 per cent in Spice Telecom (the BK Modi group holds 51 per cent) was keen to expand its footprint in India and make some acquisitions to expand Spice's operations.

This is because Spice, at present, is limited to just two telecom circles, Punjab and Karnataka, and its expansion plans in the rest of the country have been held up primarily on account of non-availability of spectrum in many key circles.

UNI