ST Telemedia, TM Intl to pick up 47.7% in Idea

Singapore Technologies Telemedia (ST Telemedia) and TM International, the international investment arm of Telekom Malaysia, as a consortium, have entered into a definitive agreement to acquire a 47.7 per cent stake in Idea Cellular for approximately $390 million. The transaction is anticipated to be completed in the first quarter of 2005.

Under the agreement, the consortium will acquire the entire stake from Cingular Wireless, and simultaneously infuse additional capital into Idea.

On 11 December, the consortium, structured as a 60:40 joint venture with ST Telemedia holding 60 percent and TM International 40 per cent, entered into agreements with Idea and its three largest shareholders "" Cingular Wireless, the Tata Industries and the Aditya Birla group.

Upon the completion of the transaction, the consortium will become the single largest shareholder of Idea with a 47.7 per cent stake. The Indian shareholders will continue to collectively own a majority 51 per cent stake, of which Aditya Birla group will hold 26.3 per cent, and the Tata Industries 24.7 per cent.

In addition, the consortium and the Indian shareholders have entered into an option agreement that enables Tata Industries and the Aditya Birla group to sell, and the consortium to purchase their shares in Idea in the future, subject to certain conditions being met.

According to press statement issued by the companies, the Idea investment is consistent with the objectives of both ST Telemedia and TM International: to become significant wireless players in the Asian markets; and to participate in the growth opportunities in the Indian cellular market.

Telekom Malaysia's group chief executive officer, Dato' Abdul Wahid Omar, explained that Telekom Malaysia has re-strategised its international investments to focus on regional markets closer to Malaysia. This acquisition comes two days after Telekom Malaysia's acquisition of PT Excelcomindo, Indonesia's third largest mobile operator.

According to industry sources, Idea is also ready for a public listing as it has garnered a critical mass of 4.5 million subscribers.

The IPO will be done through a fresh issue and company's board and management will announce an initial public offering for the company at an opportune time, confirmed a source close to the company.