Rumour or truth: Idea to be sold?

In early 2010, there was a buzz in the market that Idea, the cellular wing of Aditya Birla Group is on sale. The rumour mongers were pitching in the 'idea' of Etisalat being the buyer. It was even suggested that sweets and congratulatory messages were exchanged at the Etisalat office once the understanding was achieved. But then, all those who had said this vanished from the scene. After that the rumours died a slow death.

Seems now either it is back from the dead or maybe this time its the truth.

Then on April 5, 2011, Bloomberg reported that Idea was in early stages of talks for sale of its stake. Quoting three people, who declined to be identified as the information was private, the report said that Aditya Birla Group was in an early phase of talks with MTN, the South African telecom giant. It further added that the group is also exploring options with US and Europe based companies.

Meanwhile Economic Times reported that Kumar Mangalam Birla has said, "It is not true. There is no such transaction," and other agencies have also iterated that spokeswoman for Idea Cellular has also said, "all information on stake sale are baseless and they are rumour."

The striking part is that despite such serious rumours, Idea has not filed any press release or sent a letter to exchange stating that this news is baseless!

Idea Cellular is one among the major telecom companies in India. It was started in 1995 by the Aditya Birla Group. The promoters control 47% of the company and 19% is owned by the Axiata Group from Malaysia. Idea's market capitalisation stands at $5 billion dollars which in effect means that Birla's stake will be valued approximately $ 2.35 billion. MTN had approximately, $5.4 billion in cash till the end of December quarter.

The possibility of the MTN angle has relevance because it has the cash to buy the stake. Although it could be a rumour because on different occasions Kumar Mangalam Birla, Chairman of the Aditya Birla group has stated that the telecom arm is not on sale.

OneIndia News