Idea Cellular mulls sale of stake, holds talks with MTN

Idea Cellular Ltd’s controlling shareholder is considering selling its stake in India’s third-largest mobile-phone company and has held talks with potential purchasers including MTN Group Ltd, said three people with knowledge of the matter.

The discussions between India’s Aditya Birla Group and Johannesburg-based MTN are at an early stage and may not result in a transaction, said the people, who declined to be identified. Birla Group is also talking with telecommunications companies in the US and Europe about a deal for the stake in Idea, said two of the people.

The Group controls Idea with a 47 per cent stake and Malaysia’s Axiata Group Bhd owns 19 per cent. Idea’s market capitalisation is about $5 billion and the Birla Group’s stake is valued at about $2.35 billion, according to data compiled by Bloomberg.

Any deal with MTN would likely involve a mix of cash and shares, said one of the people. MTN had about $5.4 billion cash as of the end of December, according to Bloomberg data. Spokesperson for Aditya Birla Group in Mumbai, denied the group was in talks. MTN spokesman Rich Mkhondo declined to comment.

MTN, Africa’s largest mobile-phone company, has failed to reach deals at least four times in the past two years. It ended talks with Weather Investments SpA to buy as much as $10 billion in assets from Egypt’s Orascom Telecom Holding SAE in June. MTN and India’s Bharti Airtel Ltd, India’s biggest wireless operator, failed in 2009 to reach agreement for a second time, while talks with Mumbai-based Reliance Communications Ltd over a deal collapsed in 2008.

MTN will increase dividends to shareholders in the absence of takeover opportunities, and the company will “continue to evaluate” acquisitions, outgoing Chief Executive Officer Phuthuma Nhleko said on March 9. He was replaced this month by Sifiso Dabengwa, who had been chief operating officer since 2004.