TM International Berhad (TMI) is pleased to announce that it has obtained shareholders’ approval for the merger of Spice and Idea Cellular Limited (Idea) undertaken by the Group at an Extraordinary General Meeting (EGM) held today in Petaling Jaya.
The shareholders also voted in favour of all the other resolutions presented at the EGM. At a press conference held after the meeting, Tan Sri Dato’ Azman Mokhtar, Chairman, TMI said: “We are pleased that the shareholders have approved all the resolutions. In particular, the approval for the merger paves the way towards bringing positive contribution to TMI by 2010 if not earlier. We are glad that our shareholders share our views on the upside of the merger and are excited to see the creation of a new number 5 in India. We believe that this will result in significant operational and strategic benefits to both TMI and Idea moving forward. Their approval is an endorsement of the Group’s vision in being the leading mobile operator in Asia by 2015.”
He also added, “The merger will hasten the increase in the number of subscribers in the TMI group of companies from 44 million to about 70 million subscribers, thus making it a company to be reckoned with in Asia. “
The other key resolutions approved during the EGM were the subscription by TMI Group of new shares in Idea, representing 14.99% of the enlarged share capital of Idea for a total cash consideration of Rs.72,945 million (approximately RM5,537 million). This was followed by the approval of the acquisition by TMI Group of Spice shares at Rs.77.30 (approximately RM5.87) per share, as a person acting in concert with Idea under the mandatory take-over offer by Idea and its persons acting in concert for the remaining Spice shares not held by them. Both the approval resulted with the merger of Spice and Idea which involves the exchange of every 100 Spice shares for 49 Idea shares.
The merger is targeted to be completed in the second quarter of 2009 and the shareholders have also given the Board the mandate to acquire additional Spice shares (to be converted to Idea shares under the merger) from Green Acre Agro Services Private Limited through a call and put option, to increase TMI Group’s stake in Idea.
Dato’ Jamaludin Ibrahim, President and Group Chief Executive Officer, TMI expressed his gratitude to the shareholders for their approvals and support. He further added “Subsequent to the announcement of the proposed transaction made in June, we have made visits to or had dialogues with many of our investors to get their feedback. Most agreed with the strategic rationale for the deal and understood that this is the best option for us, going forward. We are now finalizing our funding plan and structure. Given that this is the prime concern raised by our investors, whatever the decisions, we will seriously take into account all the feedback and suggestions we received. We hope to finalise that within the next 3-6 months”.
Prior to the merger, Idea stood at 6th position and Spice at the 8th position. Spice is a two circle regional player ranking number 5 in Karnataka and number two in Punjab while Idea has 11 existing operations. The combination of Spice and Idea resulted with operations in 13 circles with no operational overlaps. Idea has also been performing well, with a 71% year-on-year growth in subscribers in 2007, outperforming industry growth of 56%, together with revenue CAGR of 50% and EBITDA CAGR of 44%.
Apart from that there are also potential synergies to TMI arising from the merger. TMI will have greater exposure to new emerging business models such as pay-as-you-grow, managed services, active/passive infrastructure sharing and hosted value added services. Together, TMI and Idea can form a business cooperation form to facilitate synergies and sharing of knowledge and best practices
“From a bigger perspective, this deal is part of the grand scheme to transform us to become a leading regional mobile champion. It is part of our plans to realize the potential value of our operating companies. In the case of Spice, a merger with Idea will make our Indian operations a major contributor to TMI’s net profit within the next few years. In fact by 2012, we expect 15-18% of our net profit to come from the combined entity. For some other operating companies, we also have to make either strategic changes or operational improvements. To date, we are on track to achieve that and expect to see visible results mostly starting from the end of the year” concluded Dato’ Jamaludin Ibrahim.
ABOUT SPICE
Spice was incorporated as Modicom Network Private Limited on 28 March 1995 as a private limited company under the laws of India. Spice subsequently became a deemed public company under Section 43(1A) of the Companies Act, 1956 of India with effect from 1 April 1999 and its name was changed to Modicom Network Limited. Spice assumed its present name via a fresh Certificate of Incorporation dated 3 December 1999. With the addition of the word ‘Private’ in Spice’s name under Section 43(2A) of the Companies Amendment Act, 2000 of India, Spice’s name was changed to Spice Communications Private Limited with effect from 28 October 2003. On 28 December 2006, Spice was converted into a public limited company and assumed its present name.
Spice currently offers mobile telecommunications services in the Punjab and Karnataka circles of India. As of 31 March 2008, Spice had 4.2 million subscribers representing a 1.6% market share in India, and was the second and fifth largest mobile telecommunications service provider within the Punjab and Karnataka circles, respectively.
Spice has recently received four Unified Access Services licenses for the Maharashtra, Andhra Pradesh, Haryana and Delhi circles. Spice will be entitled to 4.4 MHz of GSM spectrum per circle, subject to availability.
Spice was listed on the Bombay Stock Exchange Limited on 19 July 2007 and on National Stock Exchange on 16 June 2008.
Spice’s net assets and profit after taxation are INR8,579 million and INR3,801 million respectively, based on its audited financial statements for the financial year ended 31 December 2007.
ABOUT IDEA
Idea Cellular Limited (“Idea”) was incorporated as Birla Communications Limited on 14 March 1995 as a private limited company under the laws of India. On 30 May 1996, its name was changed to Birla AT&T Communications Limited following the execution of a joint-venture agreement dated 5 December 1995 between AT&T Corporation and Grasim Industries Limited pursuant to which the Aditya Birla Group held 51% of Idea’s equity share capital and the AWS Group held 49% of Idea’s equity share capital. With effect from 1 January 2001 following its merger with Tata Cellular Limited, the jointventure agreement between AT&T Corporation and Grasim Industries Limited dated 5 December 1995 was replaced by a shareholder’s agreement dated 15 December 2000 entered between Grasim Industries Limited on behalf of the Aditya Birla Group, Tata Industries Limited on behalf of the TATA Group and AT&T Wireless Services Inc. on behalf of the AWS Group following which Idea’s name was changed to Birla Tata AT&T Limited on 6 November 2001.
Consequent to the introduction of the “Idea” brand, Idea’s name was changed to its present name on 1 May 2002. The AWS Group exited from Idea on 28 September 2005 by selling 371,780,740 equity shares of Idea, which constituted 50% of the holding of AT&T Cellular Private Limited in Idea’s equity share capital to ABNL and by transferring the remaining 371,780,750 equity shares to Tata Industries Limited. The TATA Group ceased to be a shareholder of Idea on 20 June 2006 when Tata Industries Limited and Apex Investments (Mauritius) Holding Private Limited (formerly known as AT&T Cellular Private Limited) sold all their shares in Idea to the Aditya Birla Group. On 26 October 2006, P5 Asia Investments (Mauritius) Limited acquired 14.60% of Idea’s equity share capital.
Idea is currently the 6th largest mobile telecommunication company in India, in terms of number of subscribers. As of 31 March 2008, Idea had 24 million subscribers representing a 9.4 % market share in India. Idea was listed on the National Stock Exchange and Bombay Stock Exchange in India on 9 March 2007. Idea’s consolidated net assets and profit after taxation are INR21,791.5 million and INR10,423.1 million respectively, based on its audited consolidated financial statements of Idea for the financial year ended 31 March 2008.
For more information on Idea visit: www.ideacellular.com or www.adityabirla.com
ABOUT TMI
TMI is an emerging leader in Asian telecommunications with significant presence in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia. In addition, the Malaysiangrown holding company has strategic mobile and non-mobile telecommunications operations and investments in India, Singapore, Iran, Pakistan and Thailand. The Group’s mobile subsidiaries and associates operate under the brand name ‘Celcom’ in Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘AKTEL’ in Bangladesh, ‘HELLO’ in Cambodia, ‘Spice’ in India, ‘M1’ in Singapore and ‘MTCE’ in Iran (Esfahan).
Listed on Bursa Malaysia, TMI is among the top ten biggest public-listed companies in Malaysia by market capitalisation, and the first listed pan-Asian pure cellular service provider in the region.
The Group, including its subsidiaries and associates, has about 44 million mobile subscribers in Asia, putting it among the largest mobile telecommunication providers in the region by turnover. The Group has approximately 13,000 people under employment in ten countries.
For more information on TMI visit: www.tmigroup.com
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