The Hindu : Business : Providence Equity to pick up stake in ABTL for $640m

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Providence Equity to pick up stake in ABTL for $640m

Special Correspondent

Fund will be used for network roll-out, ongoing operations

MUMBAI: Aditya Birla Telecom Ltd. (ABTL), a wireless communications company and a wholly-owned subsidiary of Idea Cellular, has announced that Providence Equity Partners, a leading U.S.-based private equity firm, has agreed to invest $640 million in ABTL. One of the largest private equity investments in India, the Providence investment will be used to fund the network roll-out and the ongoing operations of ABTL.

Creating value

Kumar Manglam Birla, Chairman of Idea and the Aditya Birla Group, said, “This transaction demonstrates the sustained effort of the Aditya Birla Gorup towards strengthening businesses and creating value for shareholders.”

ABTL owns the telecom UAS licence for the Bihar service area and will hold a 16 per cent stake in Indus Towers, a joint venture company formed by Vodafone Essar, Bharti Airtel and Idea Cellular to provide passive infrastructure services. The Bihar service area, covering Bihar and Jharkhand, has the second highest population among all service areas of India, but with the lowest mobile penetration. The company had already received spectrum and was in an advanced stage of readiness to roll out mobile services under the Idea brand in the next few months.

Idea has licenses to operate in all 22 service areas with commercial operations in 11 service areas. With the planned launch of services in Mumbai, Bihar and Jharkhand in the third quarter of the year and Orissa and Tamil Nadu (including Chennai) towards the end of the calendar year, Idea’s footprint will soon cover about 77 per cent of Indian telephony potential.

Listing plan

PTI reports:

ABTL would dilute 20 per cent stake to Providence Equity for $640 million (Rs. 2,560 crore). “The fund will be used to carry out the firm’s network roll out and ongoing expansion programmes and for future use,” Idea Cellular’s Managing Director Sanjeev Aga said here. The transaction, however, was subject to regulatory approvals and expected to be closed by August, he said. Providence Equity Partners had already invested around $400 million in Idea Cellular.

With the transaction, Aditya Birla Group’s stake in the firm would come down to 80 per cent, Mr. Aga said.

DSP Merrill Lynch acted as the sole financial adviser to Idea for this transaction.

Asked whether ABTL would be listed in domestic bourses, he said “That (IPO) is in the medium term, not immediately. This is certainly not going to happen in the current year”.

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