Providence invests USD 640 million in Aditya Birla Telecom
22nd May, 2008
Idea subsidiary strongly positioned for growth
Aditya Birla Telecom Limited (ABTL), a wholly-owned subsidiary of Idea Cellular Limited (Idea), today announced that Providence Equity Partners (Providence) has agreed to invest USD 640 million in ABTL, a wireless communications company in India.
Said Kumar Mangalam Birla, Chairman of Idea and the Aditya Birla Group, "This transaction demonstrates the sustained effort of the Aditya Birla Group towards strengthening businesses and creating value for shareholders."
Sanjeev Aga, Managing Director of Idea, commented, "This commitment will bolster our position as a leading telecom player in India. We share a relationship of trust with Providence which has facilitated putting through a large transaction in next to no time."
Added Biswajit Subramanian, Managing Director of Providence Equity Advisors India, "We are pleased with our successful partnership with Idea and look forward to extending that relationship to this important investment in the future of India's mobile communications sector. The Idea management team is proven and respected, and we look forward to supporting their success at ABTL."
This is one of the largest private equity investments in India. The Providence investment will be used to fund the network rollout and ongoing operations of ABTL.
ABTL owns the telecom UAS license for the Bihar service area and will hold a 16 per cent stake in Indus Towers.
The Bihar service area, covering the states of Bihar and Jharkand, has the second highest population among all service areas of India, but with the lowest mobile penetration. The company has already received spectrum, and is in an advanced stage of readiness to roll out mobile services under the Idea brand in the next few months.
Indus Towers is a joint venture company formed by Vodafone Essar Ltd, Bharti Airtel Ltd and Idea Cellular Ltd to provide passive infrastructure services to various mobile operators in 16 telecom service areas. Indus will be the largest company in the world of its kind, in one of the biggest and fastest growing telecom markets.
The transaction is subject to regulatory approvals and is expected to close by August 2008.
DSP Merrill Lynch acted as the sole financial adviser to Idea on the transaction.
A leading GSM mobile services operator, Idea Cellular has licenses to operate in all 22 service areas of India with commercial operations in 11 service areas. With a customer base of over 25 million, Idea Cellular runs operations in Delhi, Himachal Pradesh, Rajasthan, Haryana, Uttar Pradesh (East), Uttar Pradesh (West) & Uttaranchal, Madhya Pradesh & Chattisgarh, Gujarat, Maharashtra & Goa, Andhra Pradesh and Kerala, holds spectrum for Mumbai, Bihar, Orissa & Tamilnadu (including Chennai), and licenses for the remaining eight service areas. With the planned launch of services in Mumbai, Bihar and Jharkhand in Q3, and Orissa and Tamilnadu (including Chennai) towards the end of the calendar year, Idea's footprint will soon cover approximately 77 per cent of Indian telephony potential. Idea is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India.
Idea Cellular is a part of the US $ 28 billion Aditya Birla Group, India's first truly multinational corporation. The group has a market cap in excess of US $ 31.5 billion, operates in 20 countries, and is anchored by 100,000 employees belonging to 25 nationalities. More information on the company is available at: www.ideacellular.com and on the group at: www.adityabirla.comAbout Providence Equity Partners
Providence Equity Partners, established in 1989 and having invested in more than 100 companies over its 19-year history, is one of the world's premiere private equity firms and the leading equity investment specialist in the media, entertainment, communications and information industries. It has approximately US$21bn of equity capital under management. It has offices in Providence (R.I.), New York, Los Angeles, London, Hong Kong and New Delhi. More information on the group is available at: www.provequity.com