Idea Final

PUBLIC ISSUE OF 283,333,333 EQUITY SHARES OF Rs. 10 EACH FOR CASH AT A PRICE OF Rs. 75 AGGREGATING Rs. 21,250 MILLION(HEREINAFTER REFERRED TO AS THE “ISSUE”). THERE IS A RESERVATION OF 6,666,666 EQUITY SHARES OF Rs. 10 EACH AGGREGATINGRs. 500 MILLION FOR THE ELIGIBLE EMPLOYEES OF THE COMPANY (“EMPLOYEE RESERVATION PORTION”). THE NET ISSUE TO THEPUBLIC OF 276,666,667 EQUITY SHARES OF Rs. 10 AGGREGATING Rs. 20,750 MILLION (HEREINAFTER REFERRED TO AS THE “NET ISSUE”).THERE SHALL ALSO BE A GREEN SHOE OPTION FOR ALLOCATING UP TO 42,500,000 EQUITY SHARES OF Rs. 10 EACH NOT EXCEEDINGRs. 3,187.50 MILLION, IN EXCESS OF THE EQUITY SHARES THAT ARE INCLUDED IN THE ISSUE. THE ISSUE WITH THE GREEN SHOEOPTION AGGREGATES Rs. 24,437.50 MILLION.

In terms of Rule 19(2)(b) of the Securities Contracts Regulation Rules, 1957, as amended from time to time (“SCRR”), with respect to the issue being lessthan 25% of post Issue capital, the Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue to the public shallbe allocated on a proportionate basis to Qualified Institutional Buyers (“QIBs”). 5% of the QIB Portion shall be available for allocation on a proportionate basisto Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds,subject to valid Bids being received at or above the Issue Price. Further, not less than 10% of the Net Issue to the public shall be available for allocation ona proportionate basis to Non Institutional Bidders and not less than 30% of the Net Issue to the public shall be available for allocation on a proportionate basisto Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Further, 6,666,666 Equity Shares shall be available for allocationon a proportionate basis to Eligible Employees, subject to valid Bids being received at or above the Issue Price.(Incorporated as Birla Communications Limited on March 14, 1995 under the Companies Act, 1956 and granted a certificate of commencement of businessdated August 11, 1995. The name of the Company was subsequently changed to Birla AT&T Communications Limited pursuant to a fresh certificate ofincorporation dated May 30, 1996. The name was subsequently changed to Birla Tata AT&T Limited pursuant to a fresh certificate of incorporation datedNovember 6, 2001. The name of the Company was further changed to Idea Cellular Limited pursuant to a fresh certificate of incorporation dated May 1,2002.) Pursuant to a certificate of registration dated October 22, 1996 our registered office was transferred from Mumbai to Gandhinagar. (For further detailssee

“Our History and Corporate Structure”

on page 137 of this Prospectus).

PROSPECTUS

Dated February 21, 2007

100% BOOK BUILDING ISSUE

IDEA CELLULAR LIMITED

an Aditya Birla Group Company

Registered Office:

Suman Tower, Plot No. 18, Sector-11, Gandhinagar – 382011

Tel:

+91 79 6671 4000

Fax:

+ 91 79 2323 2251

Corporate Office:

11/1 Sharada Center, Off Karve Road, Erandwane, Pune – 411004 Tel: +91 98500 03222 Fax: +91 98500 03999

Contact person:

A.J.S. Jhala

Email:

shs@ideacellular.com

Website:

www.ideacellular.com

THE ISSUE WOULD CONSTITUTE 10.9% OF THE FULLY DILUTED POST ISSUE PAID-UP EQUITY CAPITAL OF THE COMPANY ASSUMINGNO EXERCISE OF THE GREEN SHOE OPTION AND 12.4% ASSUMING THE GREEN SHOE OPTION IS EXERCISED IN FULL.ISSUE PRICE : Rs. 75 PER EQUITY SHARE OF FACE VALUE Rs. 10 EACH.THE ISSUE PRICE IS 7.5 TIMES THE FACE VALUE PER EQUITY SHARE

RISK IN RELATION TO FIRST ISSUE

T

his being the first public issue of Equity Shares, there has been no formal market for our Equity Shares. The face value of our Equity Shares is Rs. 10 perEquity Share and the Issue Price is 7.5 times of the Face value. The Issue Price (as determined by the Company, in consultation with the Book Running LeadManagers, on the basis of assessment of market demand for our Equity Shares issued by way of book building) should not be taken to be indicative of themarket price of our Equity Shares after our Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in our EquityShares or regarding the price at which our Equity Shares will be traded after listing.The Company has not opted for IPO grading for this Issue.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can affordto take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. Fortaking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Sharesissued/offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nor does SEBI guarantee theaccuracy or adequacy of the contents of this Prospectus. Specific attention of the investors is invited to the summarized and detailed statements in “RiskFactors” beginning on page 15

of this Prospectus.

COMPANY’S ABSOLUTE RESPONSIBILITY

We, having made all reasonable inquiries, accept responsibility for and confirm that this Prospectus contains all information with regard to us and the Issue,which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all material aspects and is not misleadingin any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makesthis Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares offered through this Prospectus are proposed to be listed on the NSE and BSE. We have received in-principle approvals from NSE andBSE for the listing of our Equity Shares pursuant to letters dated December 20, 2006 and December 22, 2006, respectively. For the purposes of the Issue,the Designated Stock Exchange is NSE.

BOOK RUNNING LEAD MANAGERS

ISSUE PROGRAMMEBID/ISSUE OPENED ON : MONDAY, FEBRUARY 12, 2007BID/ISSUE CLOSED ON : THURSDAY, FEBRUARY 15, 2007

REGISTRAR TO THE ISSUE

JM MORGAN STANLEYPRIVATE LIMITED

141, Maker Chambers III,Nariman Point,Mumbai 400 021, IndiaTel.: +91 22 6630 3030Fax.: +91 22 2204 7185Email:ideaipo@jmmorganstanley.comWebsite:www.jmmorganstanley.comContact person: Mayank Jain

DSP MERRILLLYNCH LIMITED

Mafatlal Center,10th Floor,Nariman PointMumbai 400 021, IndiaTel: +91 22 2262 1071Fax: +91 22 2262 1187Email: idea_ipo@ml.comWebsite: www.dspml.comContact person: N SShekhar

CITIGROUP GLOBALMARKETS INDIAPRIVATE LIMITED

Bakhtawar, 12th Floor,Nariman PointMumbai 400 021, IndiaTel: + 91 22 5631 9999Fax: +91 22 5631 9803Email:idea.ipo@citigroup.comWebsite:www.citibank.co.inContact person: PankajJain

UBS SECURITIES INDIAPRIVATE LIMITED

2/F, Hoechst HouseNariman Point,Mumbai 400 021, India.Tel: + 91 22 2286 2005Fax: +91 22 2281 4676Email: idea@ubs.comWebsite:www.ibb.ubs.com/Corporates/indianipo/Contact person: AviMehta

BIGSHARE SERVICESPRIVATE LIMITED

E/2 Ansa Industrial Estate,Sakivihar Road,Saki Naka,Andheri (East),Mumbai 400 072Tel: + 91 22 2847 0652Fax: +91 22 2847 5207Email: ideaipo@bigshareonline.comWebsite: www.bigshareonline.comContact person: Prakash Khare

SENIOR CO-BOOK RUNNING LEAD MANAGERS

TABLE OF CONTENTS

TITLEPAGE NUMBER

DEFINITIONS AND ABBREVIATIONS........................................................................................................... 1CERTAIN CONVENTIONS; USE OF MARKET DATA .................................................................................... 13FORWARD-LOOKING STATEMENTS ........................................................................................................... 14RISK FACTORS .............................................................................................................................................. 15SUMMARY - OUR BUSINESS....................................................................................................................... 36SUMMARY CONSOLIDATED FINANCIAL INFORMATION .......................................................................... 38SELECTED UNAUDITED OPERATING DATA ................................................................................................ 41THE ISSUE ..................................................................................................................................................... 42GREEN SHOE OPTION................................................................................................................................... 43GENERAL INFORMATION ............................................................................................................................. 47CAPITAL STRUCTURE................................................................................................................................... 61OBJECTS OF THE ISSUE............................................................................................................................... 74BASIS FOR THE ISSUE PRICE....................................................................................................................... 82STATEMENT OF TAX BENEFITS ................................................................................................................... 85OVERVIEW OF THE MOBILE TELECOMMUNICATIONS INDUSTRY IN INDIA ............................................ 92INDIAN TELECOMMUNICATIONS INDUSTRY REGULATION...................................................................... 105BUSINESS ..................................................................................................................................................... 110OUR HISTORY AND CORPORATE STRUCTURE .......................................................................................... 137SUBSIDIARIES............................................................................................................................................... 142MANAGEMENT ............................................................................................................................................. 148THE PROMOTER GROUP............................................................................................................................... 166OUR PROMOTERS......................................................................................................................................... 167PROMOTER GROUP ...................................................................................................................................... 179RELATED PARTY TRANSACTIONS .............................................................................................................. 191DIVIDEND POLICY ......................................................................................................................................... 193FINANCIAL STATEMENTS ............................................................................................................................ 194MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS.................................................................................................................. 283DESCRIPTION OF CERTAIN INDEBTEDNESS .............................................................................................. 311CAPITALIZATION ........................................................................................................................................... 318OUTSTANDING LITIGATIONS AND OTHER MATERIAL DEVELOPMENTS ................................................. 319LICENSING ARRANGEMENTS...................................................................................................................... 398OTHER REGULATORY AND STATUTORY DISCLOSURES ........................................................................... 407TERMS OF THE ISSUE .................................................................................................................................. 415ISSUE STRUCTURE....................................................................................................................................... 418ISSUE PROCEDURE ...................................................................................................................................... 421MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION ......................................................................... 449RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES ........................................................ 476MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONS.............................................................. 478DECLARATION............................................................................................................................................... 480

1

DEFINITIONS AND ABBREVIATIONS

A. Company Related Definitions and Abbreviations

Definition/Abbreviation Description/Full form

Additional DirectorDirector appointed pursuant to section 260 of the Companies Act, 1956, in placeof a regular director on the board of a companyAsianAsian Telephone Services LimitedAWS GroupCompanies including the AT&T Wireless Services Inc. that constitute part of theAWS GroupBhagalaxmiBhagalaxmi Investments Private LimitedBTA CellcomBTA Cellcom LimitedCFOChief Financial Officer of the CompanyEscotelEscotel Mobile Communications Limited, now known as ‘Idea MobileCommunications Limited’EscortsEscorts Telecommunications Limited, now known as ‘Idea TelecommunicationsLimited’Established CirclesThe telecom Circles in which the Company had commercial operations as atMarch 31, 2006, namely: the Andhra Pradesh, Delhi, Gujarat, Haryana, Kerala,Madhya Pradesh, Maharashtra and Uttar Pradesh (West) Circles“the Group”Unless the context otherwise requires, refers to Idea Cellular Limited and itsSubsidiaries“Idea Cellular” or “the Company” or “Idea Cellular Limited, a public limited company incorporated under theour Company” or “Idea Cellular Limited”Companies Act, 1956or “we” or “us” and “our” or “ICL”IMCLIdea Mobile Communications LimitedITLIdea Telecommunications LimitedLicense ApplicationsApplications made by us to the DoT for the grant to us of UAS Licenses in theCircles of Tamil Nadu (including Chennai), Kolkata, Karnataka, Punjab, West Bengal(and the Andaman and Nicobar Islands), Orissa, Assam, North East, Jammu andKashmirManaging DirectorA director who, by virtue of an agreement with the company or a resolutionpassed by the company in general meeting or by its board of directors, or byvirtue of its memorandum or articles of association, is entrusted with substantialpowers of management which would not otherwise be exercisable by him.Currently, Mr. Sanjeev Aga is the Managing Director of the CompanyNew CirclesThe Circles where the Company has had a commercial launch between Septemberand November 2006, namely, the Himachal Pradesh, Rajasthan and Uttar Pradesh(East) CirclesOur 13 CirclesOur Established Circles, the New Circles, Mumbai and Bihar CirclesP5 AsiaP5 Asia Investments (Mauritius) LimitedPreference SharesPreference shares of face value of Rs. 10 million each issued by the Company