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ABOUT THE COMPANY

•Idea Cellular is part of Aditya Birla Group

•Operations exist in 13 Service Areas covering the states of

Delhi, Maharashtra, Goa, Gujarat, Andhra Pradesh, Madhya
Pradesh, Chattisgarh, Uttaranchal, Haryana, UP, Himachal
Pradesh, Rajasthan, Kerala, Bihar & Jharkhand

•IDEA Cellular has licenses to operate in all 22 Service Areas

•Customer base of over 30 million

•Won the GSM Association Award for “Best Selling and

Customer Care Solution” for 2 Consecutive years.

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COMPARISONS

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 ABOUT THE COMPANY

•Spice Telecom is the brand  name of Spice

Communications

• Spice Telecom is currently operating in the states

of Punjab and Karnataka

•Spice Communications Limited was promoted by Dilip

Modi of Modi Wellvest Private Limited

•Telekom Malaysia Berhad owns 39.20% through TMI

India Limited.

•Spice’s cellular services have a customer base of over 1.8

million as at January 2006 in Punjab and Karnataka
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 DEAL CHRONOL0GY
Idea Acquires Spice
Exit of Modi
promoter’s 40.8%
= Group from Spice
stake@Rs.77.30 per
Communication
share

Idea to make 20% Idea gets 60.8%

open offer to Spice stake in Spice
=
Shareholders along with TMI
@Rs.77.30 per share

Idea to make preferential

TMI gets 14.99%
issue of 46.473 Cr equity
in Idea’s equity
shares to TMI@Rs.156.96 =
capital post the
per share
issue
TMI to get shares in
Idea through share TMI gets
swap in the ratio of around18-20% in
=
49:100 idea Cellular post
the share swap 5
 ADVANTAGES TO IDEA

INCREASED CUSTOMER BASE

•Through Spice, Idea's mobile subscriber base increases by

over 17% to 30.6mn and its market share rises by 165bp to
11.2%.

• The company gets an immediate subscriber base in the

circles of Punjab and Karnataka.

•If company was to start operations on in these circles, it

would take several months to roll-out,operations post the
receipt of spectrum and most likely in excess of 2-3 years
at least before the circles would break-even at the EBITDA
level.

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 SPICE AN ACTIVE PLAYER IN TWO CIRCLES

•Spice Communications is fairly well-placed in its two

circles of operations, namely Punjab and Karnataka

•In Punjab Spice enjoys a 22.5% market share and is the

second-largest player after Bharti Airtel.

•In Karnataka it has 10% of the market share

•Spice has an overall market share of over 15%, thus

reflecting its fairly competitive positioning

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 ACCESS TO CRUCIAL 900 MHz BAND

•Spice, being amongst the first two operators in both

Punjab and Karnataka, has spectrum in the 900 MHz
band in both these circles

•The 900 MHz band has greater propagation

characteristics, thereby enabling lower capex costs for
expansion of coverage area, as the number of towers
and base stations required would be lesser than in the
1,800 MHz band.

•Thus, this is a positive for Idea, as after completion of

the transaction, it will have 900 MHz spectrum allotment
in 9 circles out of the 13

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 TMI AS AN STRATEGIC INVESTOR

•One of the biggest benefits for Idea Cellular on account of

this deal would be gaining the expertise of TMI as a
strategic investor

•TMI would get a board seat and comes with significant

experience in emerging market operations in countries like
Sri Lanka, Pakistan, Malaysia,indonesia and Bangladesh

•TMI also has strong experience in operating 3G networks

in other markets, which would be of help for Idea as and
when it bids for 3G licences in India.

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STRONG CASH INFUSION WILL LEAD TO BETTER BALANCE
SHEET

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DILUTION OF EQUITY

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 REASONS FOR SPICE TO MERGE

•REJECTION OF PAN INDIA LICENSE-Spice applied for PAN

India License but it was rejected by the Telecom Tribunal. This
made Spice look for partners and this search ended with Idea
acquiring 40% stake

•HIGHLY COMPETITIVE INDUSTRY-Not able to compete

with likes of Bharti ,Vodafone etc.

•NEGATIVE PROFITS-Low Tariff rates and high competition

hit the Spice Telecom’s finances and it made a loss of Rs.59.2
Crore in 2007.

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FINANCIALS

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POST MERGER DYNAMICS

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 POST MERGER PROBLEM

•LOWER EPS- Since Idea’s equity will see a 23% diliution this
will lead to a lower EPS.
 
EPS= PAT/Number of shares Outstanding

•MARGIN PRESSURE
 
The margin of Idea may be reduced taking in account lower
profitability of spice.

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THANK
YOU
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