BK Modi to sell 40% in Spice Comm to Idea: Srcs

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BK Modi to sell 40% in Spice Comm to Idea: Srcs

BK Modi will exit Spice Communications, reports CNBC-TV18, quoting sources. Idea will pick up Modi's over 40% stake and will make an open offer. Spice will merge with Idea Cellular, they added. Telekom Malaysia will get proportionate equity in Idea.

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By Shereen Bhan, CNBC-TV18

BK Modi will exit Spice Communications , reports CNBC-TV18, quoting sources. Idea will pick up Modi's over 40% stake and will make an open offer.

Spice will merge with Idea Cellular, they added. Telekom Malaysia will get proportionate equity in Idea.

Earlier in the day, it was reported that Telekom Malaysia was going to hike its stake, which is something that BK Modi had gone on record at their AGM on Monday to say.  He said that Telekom Malaysia was keen on upping its stake.

The big question mark in all of this was whether BK Modi would exit Spice Communications completely. He holds a little over 40% in Spice Communications. That was the big question mark. It is understood now that a decision has finally been taken. BK Modi will exit Spice Communications completely and hence Idea will come in and replace BK Modi as the Indian partner with Telekom Malaysia. Idea will then merge Spice Communications with itself.

What happens to Telekom Malaysia's over 39% stake in Spice Communications?

They get a proportionate equity in Idea. Idea will also be forced to make an open offer because there will be a management change. But it is understood that this process would take a couple of weeks because the details are still being worked out. An announcement is likely to be made possibly on Sunday or at the start of the week. But the bottomline now is that BK Modi will exit Spice Communications completely and Idea comes in and the two companies will be merged.

Spice had Punjab and Karnataka as their two lucrative circles. These are the two circles that Idea was not present in. So, this automatically gives Idea a strong foothold in those two markets. Of course, there will be other synergies and advantages as well.

CNBC-TV18 Disclaimer
This information is source-based and has not been provided to the stock-exchanges.