Idea to invest Rs 6,000 crore; to go public in February

New Delhi, Dec 18. (PTI): Aditya Birla Group company Idea Cellular, which is hitting the market with an Initial Public Offer in February, is likely to invest up to Rs 6,000 crore over the next two-three years to become a pan-India mobile service provider.
Idea, currently operating in 11 circles, including Delhi, has obtained Letters of Intent for the Mumbai and Bihar circles, which would give the company access to approximately 70 per cent of the cellular market. The company has also applied for new licenses for another nine circles.
When asked about the investment plans to become an all-India player, Idea Cellular Managing Director Sanjeev Aga said, "We have only got two LoIs Mumbai and Bihar. And I do not want to make any futuristic statement."
Aga said, the company will hit the capital market in February next year to raise Rs 2,500 crore. The proceeds from the IPO would be used for expansion of services in the existing circles, roll out of new network in Mumbai, start National Long Distance (NLD) operations and redemption of preferential shares.
Idea Cellular has seen bitter battles in the past and from a situation of multi owners it is now owned by a sole promoter Aditya Birla Group which has interests in diverse sectors like aluminium, cement and textiles among others.
Asked what makes the group confident of growing in a sector which already has intense competition with four to five operators, Aga said, "Telecom and Idea cellular is very central and the core business of the AB Group and the Group has demonstrated ability to grow in diverse businesses."
"Arithmetically we are the number five cellular operator after Bharti, Reliance, BSNL and Hutch-Essar, but we are the leading operator in six of the 11 circles we have operations," he said.
Asked if Idea would be positioned in the market in accordance with the Group's philosophy of being only in businesses where it could be among the top three players, he said, "When we enter a new market it is with the aim of robust business and compete effectively."
"We are currently one of the fastest growing mobile operators and, in the period between April-September 2006, have consistently grown at a rate greater than that of the industry as a whole in the established circles with a market share of net adds at approximately 21 per cent," the draft prospectus said.
The company is bullish to roll out network in Mumbai circle saying, "It is attractive to us because Mumbai is the Commercial Capital of India and also because of the community of telephony interests including the benefit of traffic flows with other circles, particularly Maharashtra, Delhi and Gujarat circles."
The company is also considering a pre-IPO placement of up to 15 per cent of the IPO size to certain investors, the prospectus said adding that if the pre-IPO placement was completed, the net issue would be reduced to that extent.

Source : Hindu