Idea earmarks Rs 800 cr for buyouts

Idea Cellular, an Aditya Birla group company, has earmarked over Rs 800 crore of its initial public offering (IPO) proceeds, which has been lying unutilised, for acquisitions and expansion. The GSM provider had raised around Rs 2,200 crore from its IPO in February last year.

The company received shareholders’ approval on July 30 to use the unutilised IPO proceeds of Rs 803.59 crore for mergers and acquisitions, Idea Cellular informed the BSE today.

During its EGM on July 30, the company stated that it plans to invest around Rs 647 crore for the rollout of operations in the Mumbai circle. However, this was later increased to Rs 800 crore, with the investments coming in from the IPO proceeds and internal accruals.

The GSM service provider had also sought shareholders' approval for allotment of shares totaling Rs 7,294 crore to TMI Mauritius, a unit of Telekom Malaysia which owns 39.2 per cent stake in Idea. The stake sale to Telekom Malaysia is in lieu of acquiring Spice Communications.

The company was offering 46.47 crore shares at Rs 146.96 a share, in exchange for the TMI Mauritius 39.2 per cent stake held in Spice Communications.

Earlier at the time of the IPO, Idea Cellular had stated that it intends to pursue expansion through both greenfield and brownfield modes. A part of IPO proceeds would be used for this acquisition.

The company, the fifth largest telecom service provider in India, had also sought permission to invest another Rs 81 crore as entry fee and capital expenditure for its national long distance (NLD) operations.

Idea, according to the EGM notice, has utilised around Rs 62 crore for the IPO expenses and Rs 302 crore for general corporate purposes. The company recently acquired B K Modi's 40.8 per cent stake in Spice Communications in an all-cash deal worth Rs 2,700 crore, including non-compete fees. The deal values Spice at around Rs 6,800 crore.