Idea plans IPO in early 2007

Category: Markets | 1 Comment | Posted on October 2, 2006

Idea Cellular, the fourth largest GSM operator in the country, is planning an initial public offer for raising about Rs 1,400 crore – Rs 1,800 crore .

Birlas are open to divesting around 25% and may also place 8-10% with a private investor before the IPO. It also plans to cut Aditya Birla Group’s stake in Idea to 55.3% from the present 98.3%. DSP Merrill Lynch and JM Morgan Stanley have been appointed as lead managers to the issue.

The operator had initially intended to place 33% with private investors and was in serious discussions with the Blackstone group, Providence Equity Partners and a couple of others. But they were unable to agree on the valuation and the company was now looking at an IPO, sources said.

Idea Cellular was a joint-venture between the Tatas and the Birlas. The Birlas bought out Tatas’ 48% stake for Rs 4,406 crore in April this year.

On a turnover of Rs 2,989 crore, the company has seen its profits rise by 179% to Rs 212 crore for fiscal 2006. The management hopes that the company will be valued upwards of Rs 10,000 crore.

Idea Cellular needs funds to expand operations and is planning to roll out services in Rajasthan, Himachal Pradesh and Eastern UP by this year-end and enter the Mumbai market around mid-2007. Idea has a presence in Maharashtra, Gujarat, Madhya Pradesh, Andhra Pradesh, Delhi, Kerala, Haryana and Western UP. It is India’s fourth largest mobile operator with 9.7 million subscribers.

Bharti Airtel, Reliance Communications, MTNL and Tata Teleservices (Maharashtra) are the other listed services providers. Hutch has been harbouring plans to enter the primary market for some time now.

Valuations in the telecom sector have appreciated 30-40% since the stake sale between the Tata group and the Birlas was completed in June. Bharti Airtel, the largest cellular services player in the country, is currently trading at Rs 469, which is nearly 30% higher than its last traded price in June. Reliance Communications, the second largest listed player, is currently trading at Rs 347, 40% higher than its last traded price in June.

Sources: Financial Express and NDTV Profit

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