Idea Cellular, Tata’s and Birla’s JV(after exit of AT&T) for providing GSM cellular service ran into rough weather when, Kumar Birla declared that Telecom was a thrust area for the A V Birla group. Tata’s kicked off their telecom venture in early 90s with investment in Idea and later when Reliance opted for CDMA licenses, Tata’s joined the bandwagon too conflicting their earlier investments being done by diverting money from different group companies. [Take this link on SuchetaDalal.com]
Insiders say that Tatas needed cash to expand its Tata Indicom services and hence they decided to sell out their 48% stake in Idea to Maxis Telecom. Not a bad timing considering the SENSEX at 11,600 & the fair valuations the Telecom stocks are enjoying. Due to joint venture clause, Birlas matched the Maxis offer and bought Tatas stake at Rs4406 crores(approximately USD 1.0 Billion) making Birlas the sole owners of Idea cellular(C Sivsankaran holds 1.7%). So is the Idea cellular with 7.72% GSM cellular market share valued at just $2.0 Billion ?