Telekom Malaysia will gain the management control of Spice Communications, reports CNBC-TV18, quoting sources. The Spice promoters – the Modis may exit or retain a marginal stake, sources add. Idea will pick up a stake in Spice and eventually merge Spice with Idea, they say.
Earlier, CNBC-TV18 had learnt that BK Modi had said in the AGM that took place on Monday, that Telekom Malaysia was actually considering upping its stake in Spice Communications all the way up to 74%. Now does that actually indicate that the Modis are willing to exit because what CNBC-TV18 understands from the sources is that the Modis may actually exit the venture altogether and IDEA Cellular will come in as an Indian partner.
And if that happens, then will Spice Communications be merged with IDEA – there is still no clarity as far as the M&A regulations are concerned and also as far as price is concerned because BK Modi had gone on record at that AGM to say that nothing less than Rs 60 per share would be agreeable to them and what we understand from our sources is that they are looking at over Rs 90 per share and what they are being offered at this point in time is a little over Rs 70 per share.
CNBC-TV18 has learnt from sources that Telecom Malaysia will now gain management control of Spice Communication. The promoters of Spice and BK Modi will exit or retain marginal stake.
On May 5, it was learnt that Telecom Malaysia is likely to hike its stake in Idea. In fact, promoter BK Modi said that Telecom Malaysia could go up to 74% in the Annual General Meeting (AGM). But it is now understood that Telecom Malaysia is currently looking at hiking its stake to 51%. It has a little over 39% at this point in time and it will then gain management control of Spice Communication.
The promoter of Spice i.e. the BK Modi group have a little over 40% stake. They will either exit completely or retain a marginal stake. That decision has not been taken as of now.
Idea will then come in into this equation. It could look at picking up about 10%, which is currently allowed under the merger and acquisitions rules. An existing operator can only pick up under 10% in an existing cellular operator. They could look at that option or could look at maybe an open offer if they pick up additional stake and eventually look at merging Spice and Idea together.
It is more or less confirmed that Telecom Malaysia is going to go up to 51%.
The BK Modi Group has been talking about fair value of over Rs 60 a share. Sources said that the Modi group is looking at close to Rs 90 a share. Idea has been keen between Rs 70-74 per share. So, that is where the price negotiations are currently on.
Sources added that by the beginning of next week, some of these issues could be sorted out and we could hear an announcement.
Spice merging with Idea eventually seems to be the most likely scenario at this point in time, with the BK Modi group either exiting or retaining a marginal stake in Spice Communication.
Source: Money Control