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Birlas to now recast telecom biz
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After cement, the Aditya Birla group is restructuring its telecom operations. Aditya Birla Telecom (ABTL), a subsidiary of Idea Cellular, will soon demerge the licence for Bihar & Jharkhand circle and merge it with the parent company.

ABTL has already filed for a ‘scheme of arrangement’ with the Bombay High Court, Idea CFO Akshay Moondra confirmed the development. “We are doing it to consolidate all operations under Idea Cellular. Now that Spice merger is coming to a close, we thought we should do this circle also,” he told ET.

The aim is to make Idea Cellular the umbrella company for telecom operations, holding licenses for all the 22 circles, a source familiar with the exercise told ET. “This will give Idea Cellular a direct control over all the licenses across India and help improve its valuation,” said another official who is not authorised to speak to the media.

Recently, the group announced plans to put its entire cement business under UltraTech. Under the plan, the cement business of Grasim is being demerged into a wholly-owned subsidiary which will eventually be merged with UltraTech.

Currently, 19 circles are under Idea Cellular. Punjab and Karnataka circles, which came in with the acquisition of Spice Communications, will come into Idea’s fold by the end of this year. The companies have received almost all the regulatory clearances for that merger. The only remaining circle then was Bihar & Jharkhand.

The license for Bihar and Jharkhand was obtained by the AV Birla group through ABTL because the erstwhile joint venture partners, Tatas, also held the license for that circle. Subsequently, after Tatas exited, ABTL became a subsidiary of Idea Cellular.

The entire exercise around restructuring of licenses is expected to be over by this year-end. After this, ABTL will be left with 16% stake in Indus Towers, the three-way JV between Bharti Airtel, Vodafone Essar and Idea Cellular. ABTL will also hold the demerged towers business of Idea Cellular. US-based private equity firm Providence, which spent $630 million in picking up 16% in ABTL, has already given its green signal to the plan, said sources.

Idea scrip closed at Rs 62.05, down 2.82% on the BSE. Idea has also received various regulatory clearances for demerging its passive infrastructure to Idea Cellular Towers Infrastructure (ICTIL), which will have Idea’s nearly 11,000 towers in nine circles.

Ultimately, this will also merge with Indus Towers. Idea is aiming to become a pan India player this fiscal, having already become operational in 19 circles. With a subscriber base of over 52 million, Idea is India’s fifth-largest telecom operator.

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