Aditya Birla Group in talks to raise $1 bn for Idea Cellular

Mumbai: The Aditya Birla Group is in talks with buyout firms to sell stakes in promoter entities that control Idea Cellular Ltd to raise more than $1 billion, part of which will be used to pay down regulatory dues of the telecom operator ahead of a merger with Vodafone India Ltd, two people directly aware of the development said.

The stake sale transaction is being structured in this way to maintain the total shareholding of the promoter entities in Idea Cellular at the current level, one of the two people cited above said, requesting anonymity.

The promoter group of Idea Cellular consists of seven entities, including Aditya Birla Group chairman Kumar Mangalam Birla, owning a combined 42.57% stake.

The group’s flagship company Grasim Industries Ltd owns 23.14% in Idea and Birla TMT Holdings Pvt. Ltd owns 6.51%.

“The overall size of the deal is expected to be more than $1 billion,” said the second person cited above, also requesting anonymity.

Emails seeking responses from Idea Cellular and Aditya Birla Group did not elicit a response until press time on Monday.

In January, Aditya Birla group had said that it would invest Rs3,250 crore in Idea Cellular to strengthen its balance sheet.

The equity infusion is expected to increase Aditya Birla Group’s stake in Idea Cellular to 47.2%.

Vodafone India’s parent also plans to invest nearly Rs9,350 crore as part of the merger conditions, Mint reported.

The proposed capital raising by Idea, the sale of its standalone towers to American Tower Corp. and the potential sale of its 11.15% stake in Indus Towers Ltd will further augment the firm’s long-term capital resources, Idea had said in a statement.

Mint had also reported in February that Idea Cellular and Vodafone India, whose merger will create India’s largest telecom operator, will invest Rs60,000 crore in infrastructure to meet surging demand for data.

Meanwhile, The Economic Times reported earlier this month that the telecom department is likely to ask Vodafone India and Idea Cellular to collectively pay nearly $3 billion in dues relating to a mix of pending licence fees, spectrum usage charges and one-time spectrum charges before clearing their merger.

According to the report, Vodafone India’s licence fee and spectrum charge dues are roughly Rs5,532 crore while the one-time spectrum charge due is about Rs3,600 crore. Idea’s total licence fee and spectrum usage charge dues are close to Rs7,625 crore and its one-time spectrum charge dues is Rs2,113 crore.