The Telegraph
Since 1st March, 1999
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Birlas up ante in battle against Tatas

New Delhi, Feb 25: The Aditya Birla group today intensified its attack on the Tatas by shooting off another letter to the government alleging that the latter had not disclosed its acquisition of AWS Mauritius’ equity in Idea Cellular.

The simmering tension between two of India’s biggest business houses erupted on Thursday, following reports that the AV Birla group had written to the department of telecommunications to clarify the licence conditions, which prohibit a telecom player from owning stake in two competing operations in the same circle.

The Tatas are expected to respond to the latest missive from the Birla group in a day or two.

Communications minister Dayanidhi Maran today said the government was looking into the matter. “We are looking into the issue,” Maran said but refused to elaborate.

Idea Cellular was created after a merger between Tata group’s GSM business and Birla AT&T and is, at present, operating in seven telecom circles, including Maharashtra, Gujarat and Delhi.

The Birlas, through Aditya Birla Nuvo Limited, hold 50.14 per cent stake in Idea Cellular and the Tatas have 48.14 per cent.

The Tatas had acquired the equity of Mauritius-based AWS in Idea in September last year.

The Birlas want the Tata group to bring down its equity to below 10 per cent to comply with the licence conditions as it is also operating a CDMA service under the brand name Tata Indicom.

The existing licence conditions stipulate that a company cannot hold more than 10 per cent in more than one licensee company in the same service area for basic, cellular and unified access service.

The Tatas, however, are not willing to budge, at least for now as it is seeking a “fair value” to offload its equity in Idea.

Industry sources said the Tatas have initiated discussions with Malayasian telecom major Maxis, although it is still at a very nascent stage.

Earlier, this week, the Birlas had written to the government seeking DoT intervention for reducing Tata’s stake in Idea Cellular.

The Tatas responded by saying that the process has already been initiated, but they need sufficient time to do so to get a “fair value” for their stake.

It has also said that it would bring the shareholding to below 10 per cent by June 30, 2006.

“We are examining the issue... Both have written to us and we are looking into various aspects and arguments given by both parties,” DoT secretary J. S. Sarma said but declined to elaborate.

It is not clear what “fair value” the Tata’s have evaluated, but industry sources said they expect the stake to fetch a price of around Rs 4,000 crore.

Analysts said the company may use the BPL Mobile sale to the Essar group as a benchmark, which fetched Rs 4,400 crore.

It is not clear how much the Birlas are willing to offer.

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