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Telekom Malaysia acquires 49% stake in Spice Telecom

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MUMBAI: Telekom Malaysia Berhad (TM) has secured a critical piece in its regional footprint, with the acquisition a 49 per cent stake in India's Spice Communications Pvt Ltd (Spice) for a consideration of $178.85 million.

The acquisition, made through TM’s international investment holding company TM International Sdn Bhd (TMI) involved the purchase of the stake held by Deutsche Bank AG and Ashmore Investment Management Limited consortium (DBA).

The remaining 51 per cent remains with the existing shareholders, the Mcorp Global Ltd and its associates (Mcorp).

A statement jointly released in Kuala Lumpur and New Delhi stated that the definitive agreements governing the transaction were executed in Kuala Lumpur today. Completion of the transaction is expected within a month, subject to closing conditions and regulatory approvals. A media conference-cum-briefing explaining the transaction was also held in Kuala Lumpur jointly by senior TM and Mcorp officials.

Spice is a privately held company incorporated in India providing cellular telecom services in the states of Punjab and Karnataka. The company commenced operations in 1997 after receiving its cellular licences from the Government of India.

With the company’s recent decision to migrate to the Unified Acess Licensing regime, the scope of services allowable has since broadened to further include full and limited mobility fixed and wireline services, VAS, as well as broadband services.

Through new applications, the company is also in the process of obtaining licences for 6 new circles (namely Jammu/Kashmir, Haryana, Rajasthan, Himachal Pradesh, Uttar Pradesh West/East), as well as National Long Distance (NLD) and International Long Distance (ILD) licences.

According to TM chairman Tan Sri Mohd Radzi Mansor, the proposed investment is consistent with TM’s objectives of becoming a significant mobile player in the Asian markets, and to participate in the growth opportunities in the Indian cellular market. TM, which has re-strategised its international investments to focus on regional markets closer to Malaysia, has strong presence in the Asia Pacific region, with investments in Sri Lanka, Bangladesh, Indonesia, Cambodia, Singapore and Pakistan.

"India is the missing piece in our regional footprint. Now with Spice as part of the TM family, it strengthens our regional presence and complements our existing presence in Sri Lanka where we are the number one, and Bangladesh where we are the number two mobile operator. We are excited about sharing our experience and learn more about the Indian market from Spice," he said.

"With Punjab being the most prosperous state in the country and Karnataka dubbed as the “Silicon Valley” of India, there is tremendous potential for mobile telephony in these markets. We are optimistic that Spice will contribute positively to the overall performance of TM in the near future" he added.

TM Group CEO Dato’ Abdul Wahid Omar described organic growth as the key approach for creating shareholder value in Spice. "Apart from growth through new cellular circles expansion, we are excited about the implementation of other services under the Unified Access licensing regime. TM and its partner Mcorp will seek to grow Spice to be a market leader in the geographies it operates in, including attaining a pan-India presence," he said.

"Spice customers today join TM’s global mobile subscriber base of over 20 million. Apart from TM’s operational and management experience both in Malaysia and key Asian regional markets, Spice customers stand to benefit from through the creation and innovation of new products and services, sharing of technological experience and implementation, and the leveraging of group synergies such as in global procurement," he further added.

Mcorp Global chairman Dr B K Modi described India and Malaysia as natural allies and which have strong historic cultural ties, and share the same values and aspirations.

"Today, both countries are at the forefront of the revolution in information, communication and entertainment (ICE) technologies and have much to offer each other. Together, they could become a powerful force to take Asian companies to an entirely new globally competitive level," he said.

"We are totally committed to the principles of enhancing human productivity – boosting the prosperity of the entire Asia Pacific region, and promoting global peace for the sake of all humanity. It is now time to redefine our relationship, rewrite our destiny, and reinvent the future. I am confident our strategic partnership with TM will create a new synergy and help us in maximizing growth in one of the world’s fastest growing markets," Modi added.

Dr Modi also described Spice as the pioneering brand of mobile telephony in India, committed to becoming the most preferred choice for energetic young minds through synchronised performance in ICE products and services. Spice, he said, has been built on the bedrock of its values: fun, innovation, vibrancy, empathetic, trustworthy and fast to respond. It has a presence in two of the high potential markets of Punjab and Karnataka.

Lazard India were sole financial advisors to TM and TMI on this transaction.

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