Talks Stall Over Spice India Buyout

Plans by India's Idea Cellular to take a controlling stake in rival operator, Spice Communications are reported to have stalled over a dispute about the price being offered. Investment banking sources told the Business Standard newspaper that B K Modi had asked for Rs 70 a share - but India is reluctant to pay over Rs 60 per share.

Spice shares closed at Rs 51.95 on Friday - valuing the company at around $850 million.

"Any price valuing Spice Communications beyond Rs 4,200 crore would be expensive for Idea Cellular," said an analyst with a domestic brokerage requesting anonymity.

It also emerged that UAE based Etisalat has also withdrawn from talks to take a stake in the company - also over a dispute about the price being asked.

Modi holds a 40.8 percent stake in Spice Communications, Telekom Malaysia holds 39.20 percent and the remaining 20 percent is floated on the Bombay stock exchange.

While the talks are said to have stalled on cost differences, a proposal for a merger between the two companies has not been ruled out.

Spice currently operates services in Punjab and Karnataka. While Idea Cellular was recently granted a license for the Karnataka circle - it has not been granted any radio spectrum, so a merger/takeover would assist Idea's national coverage ambitions.

On the web: Business Standard

Posted to the site on 8th June 2008