Updated Below

The Economic Times  speculates based on unnamed sources that a merger between Spice Telecom and Idea Cellular could be on the anvil. The sources seem to suggest that either of the companies could be the buyer and with talks in early stages the deal could take anywhere between 8 months to a year. Sources of the business daily claim Telekom Malaysia, which holds 49% in Spice Telecom (the BK Modi group holds 51%) is eager to expand its footprint in India and make some acquisitions to expand Spice’s operations.  If the two were to combine, they would create the country’s fifth largest cellular company, the ET article said.

Nikhil adds: Could this be as a consequence of the Hutch-Voda deal? Operators certainly seem to be keen on adding (combining, in this case) resources. Readers should also bear in mind that as per TRAI policy, spectrum is allocated to telecom operators on the basis of number of subscribers. Pooling in resources would give consolidated entities greater leverage.

Update:
According to a report in the Business Standard, Idea Cellular is on the verge of acquiring Spice Telecom in a cash cum stock deal that values Spice at $1 billion. Idea Cellular, owned by the Aditya Birla Group, is expected to issue stock to Spice promoters led by industrialist B K Modi. On the other hand, anonymous sources of the Financial Express claim that Idea’s plans to buyout Spice have hit a roadblock on the valuation issue. Meanwhile, the Economic Times quotes an unnamed Spice executive as saying that further talks related to a merger with Idea will happen after Spice’s initial public offering (IPO). Readers can only hope that the top brass at the two telcos will speak soon and clear the muddle.

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