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Telekom Malaysia phoned Spice?

Has Telekom Malaysia Berhad finally entered India by snapping up 74 per cent stake in Spice Communications Pvt Ltd, the mobile operator in Punjab and Karnataka for Rs 2,900 crore?

india Updated: Feb 18, 2006 01:46 IST

Has Telekom Malaysia Berhad finally entered India by snapping up 74 per cent stake in Spice Communications Pvt Ltd, the mobile operator in Punjab and Karnataka for Rs 2,900 crore?

Sources close to the developments say that under the deal, the Malaysian telecom major is likely to take over complete 49 per cent stake held by two foreign international allies — Deutsche Bank Group and UK-based major financial institution Ashmore Investment Management and 25 per cent equity of Modi Corp. KPMG is understood to be the advisor for the deal.

Once the deal is inked, Telekom Malaysia could become one of the major operators with a footprint in south Asia and southeast Asia. TM international Sdn Bhd, the vehicle managing the overseas venture of Telekom Malaysia, has operations and financial interests in eight countries — Sri Lanka, Bangladesh, Pakistan, Indonesia, Cambodia, Thailand, Malawi and Guinea.

A senior company executive confirmed that the Modi Corp has revisited its plans to sell its 51 per cent in the venture. The two foreign partners were exploring an option to exit from the venture.

Umang Das, Managing Director of Spice Communications Pvt Ltd (SCPL), said, "There is no question of dilution of 51 per cent stake held by M Corp. The foreign partners who hold 49 per cent in Spice Telecom have the option to exit from the venture. I do not wish to comment further."

SCPL, with a subscriber base of more than 17 lakh in Punjab and Karnataka, is one of the smaller companies to be picked up by foreign operators planning to enter India. The company executives said that the Modi Group was in negotiations with many operators like Kuwait MTC and Telekom Malaysia.

Telecom analysts say that foreign companies exploring opportunities to enter the telecom sector have a limited option and they are looking for the acquisition route. The smaller companies are easy targets, the analysts add.

Sources in the company said that the top management was always keen to bring in a telecom operator rather than a financial investor to replace Deutsche Bank Group and Ashmore Investment Management. This is important to activate the six new licences that M Corp has applied for. The company has applied for unified access service licence (UASL) to offer services in Uttar Pradesh (east and west), Jammu and Kashmir, Himachal Pradesh, Rajasthan and Haryana.

First Published: Feb 18, 2006 01:46 IST