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Our Bureau

B K Modi's Spicecorp (India) holds 51-per cent stake in Spice Tele.

New Delhi , Feb. 6

TELEKOM Malaysia Berhad is in talks with B K Modi-promoted Spice Telecom to pick up a stake in the cellular services company. This is the second attempt by TM to gain a foothold in the booming Indian cellular market after its earlier bid to acquire a 47 per cent stake in Idea Cellular was not allowed by the Department of Telecom.

In a statement issued to Bursa Malaysia, the Malaysian Stock Exchange, TM said, "We wish to inform the Exchange that Telekom Malaysia Berhad (TM), through its wholly-owned subsidiary TM International Sdn Bhd, is currently in preliminary discussions for a stake in Spice Telecom Ltd. This is consistent with TM's continued interest in India, which we see as complementing our other South Asian investments in Sri Lanka, Bangladesh and Pakistan."

Promoters of Spice Telecom were not available for comments. The company has been looking for a foreign partner for some time now. Spice offers cellular services in Punjab and Karnataka with a total subscriber base of 1.7 million users.

B K Modi's Spicecorp (India) holds a 51 per cent stake in Spice Tele, while the balance 49 per cent is shared between Deutsche Bank group and Ashmore Investment Management, a financial investor.

Malaysian telecom companies have been looking actively at acquiring Indian companies. Earlier, Maxis Communication announced a deal to acquire a controlling stake in Sivasankaran-promoted Aircel.

Telekom Malaysia, along with Singapore Technologies Telemedia (STT), had pulled out of the agreement for acquiring a 47.7 per cent stake in Idea Cellular.

The two companies had last year expressed their intention to pick up the stake held by US telecom major AT&T (now Cingular Wireless) for $390 million. However, the proposal ran into rough weather with the Department of Telecom (DoT) raising objections to the deal on the grounds that the same company could not hold more than a 10 per cent stake in two operating companies in the same telecom circles.

Idea had common areas of operations with Bharti Tele-Ventures in which Singapore Telecom holds nearly a 28 per cent stake. DoT had said that since STT and SingTel had Temasek Holdings as the common promoter, the proposal by STT and TM to invest in Idea could not be accepted.

A similar proposal from Hutchison to acquire a stake in Tamil Nadu-based Aircel was grounded after objections from DoT. It is not yet clear whether TM's latest move would attract similar action from DoT because Bharti's Airtel is also present in Punjab and Karnataka.

More Stories on : Telecommunications | Mergers & Acquisitions

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