Idea, AV Birla to divest Rs 2000 crore | Latest News India - Hindustan Times
close_game
close_game

Idea, AV Birla to divest Rs 2000 crore

None | By, New Delhi
Nov 30, 2006 08:53 PM IST

The venture will be divesting between 10 and 12 per cent, said an investment banking source, reports Arun Kumar.

With the explosive growth of their subscriber base, telecom companies are all looking at capital markets to mop up funds to fuel their expansion plan.

Idea Cellular, the fifth largest operator in the country and the flagship telecom venture of AV Birla Group, has decided to enter the capital market to mop up between Rs 1700 and Rs 2000 crore.

HT Image
HT Image

The company has appointed JM Morgan Stanley, Merrill Lynch among others as book-runners for the proposed Initial Public (IPO) offer, which is expected to be ready by January end. The company will file the draft red herring prospects (DRHP) in the first fortnight of December.

Hindustan Times - your fastest source for breaking news! Read now.

Since, under SEBI norms, the midivestnimum float size is 10 per cent, the company will divest between 10 and 12 per cent, said a highly placed investment banking source.

“The last private placement made the promoters is at a market capitalisation of Rs 15,000 crore. The proposed float is expected to be at 10 to 20 per cent premium of the private placement price,” he added.  AV Birla Group recently divested 35 per cent stake in the company to a clutch of private equity firms.

However, this is a fresh issue of shares, where the proceeds will be utilized by Ideal Cellular for capital expenditure. After the proposed issues, the promoters stake will come down to around 58 per cent.
 
Besides strengthening the existing networks, the proceeds from the proposed IPO will be used to roll out Idea Cellular's GSM network in Mumbai and Bihar, said a senior company official. 

Since subscriber bases growing very rapidly, the company needs to have a strong network in the existing circles as well as a foot print across the country.

Idea Cellular has a subscriber base of 11 million. In the last financial year, the company posted revenues of around Rs 4000 crore with a earning before interest depreciation, and tax amortization (EBITDA) of 35 per cent.

In comparison,  industry leader Bharti Airtel has a market cap of Rs 117,729 crore, reported revenues of Rs 11,660 crore in the last financial year, and registered EBIDTA of 37.4 per cent.

The second largest listed telecom venture -- Reliance Communication, has a subscriber base of 27.6 lakh and market cap of Rs 86,344 crore.

Macquarie Research, one of the leading research firms, has revised its projection for India's wireless subscriber base. Its latest report says India’s wireless subscriber number will reach 400 million by March 2010. Its earlier estimate was 350 million during the same phase. The current subscriber base of around 140 million.

According to report, the increase is being driven by better coverage by operators, a further reduction in handset price, and easing of spectrum constraints by first half of 2007 on new 3G spectrum and additional 2G and 2.5G spectrum allocation.

Email Arun Kumar: arunkumar@hindustantimes.com

Unveiling Elections 2024: The Big Picture', a fresh segment in HT's talk show 'The Interview with Kumkum Chadha', where leaders across the political spectrum discuss the upcoming general elections. Watch now!

Get Current Updates on India News, Election 2024, Arvind Kejriwal News Live, Bihar Board 10th Result 2024 Live along with Latest News and Top Headlines from India and around the world.
SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Arun Kumar is Senior Assistant Editor with Hindustan Times. He has spent two-and-half decades covering Bihar, including politics, educational and social issues.

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On