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‘We are confident we will grow’

After consolidating the Novelis acquisition, Kumar Mangalam Birla is back with this telecom merger. He spoke to Sabarinath M and Suprotip Ghosh on Idea Cellular’s merger with Spice.

business Updated: Jun 25, 2008 21:30 IST

Kumar Mangalam Birla, the 40-year old chairman of the Aditya Birla group, has transformed the group into a $28 billion conglomerate through a spate of mergers and acquisitions. More than a year ago, the group company Hindalco paid Rs 27,000 crore to buy out Novelis, one of the world’s largest makers of aluminium products. After consolidating the Novelis acquisition, Birla is back with this telecom merger. He spoke to Sabarinath M and Suprotip Ghosh on Idea Cellular’s merger with Spice.

On Idea and its growth plans
We will invest in brand change in all the circles. This would catapult us into the big league of telecom players and would crown us as a national brand. The merger adds value to our consumers. In terms of investments it is beyond networks and investment in services such as customer service would continue. We are confident that we would grow faster than market expectations.

On whether the price paid for Spice was high
I don’t think so. We have factored in growth rates into the overall valuation. We continue to see good growth rates in the Indian telecom market and will continue to see high growth rates.

On what's in it for Indian consumers
Consumers are migrating into a strong brand here. We will take advantage of 3G rollouts that Telekom Malayasia has done in other Asian markets and will bring them to Indian consumers when the time comes. Besides, this will help our customers on international roaming, as they can use TM’s networks in other countries.

On where Idea stands in the Indian telecom landscape
Post-merger, Idea will be among the top three players in eight circles. This gives us presence in Punjab and Karnataka, where the merger adds 44 lakh subscribers. We chose to take the acquisition route instead of starting from scratch in these regions, which are significant circles.

Besides, we will launch Idea in four new circles — Orissa, Tamil Nadu, Mumbai and Bihar, in the next four months. This would give us a pan-India presence. Apart from improving our margins and profitability, it would give us a lot more firepower to grow in India. I would say this is a very strong inflection point for Idea.

On Telekom Malaysia’s role in Idea:
Telekom Malayasia’s presence brings scope of synergies such as 3G and international long distance (ILD) within Asian region. We already have a strong presence in handset retailing and with TM’s 3G experience we are in a better position to rollout across India and other Asian markets.

On management changes:
All employees of Spice Telecom will get absorbed into Idea.

On the trigger for the merger:
There is a fit between operations of Idea and Spice across different circles and which gives us a pan-India presence.