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Etisalat Considering Stake in India’s Idea Cellular

Etisalat May Consider Idea Cell for India Mobile Expansion
An acquisition in India, the world’s second-largest market for mobile-phone services, would allow Etisalat to become “an active player” in India, as outlined by Chairman Mohammed Omran Photographer: Namas Bhojani/Bloomberg

Sept. 7 (Bloomberg) -- Emirates Telecom Corp., the United Arab Emirates’ biggest phone company, said it’s considering investing in Idea Cellular Ltd. to expand its business in the world’s second-largest wireless market.

“There are many options in India, and we are not excluding Idea Cellular,” Jamal Al-Jarwan, chief executive officer for international investments at Emirates Telecommunications, also known as Etisalat, said in a telephone interview yesterday. Rajat Mukarji, a spokesman at Mumbai-based Idea, declined to comment.

An investment in India would allow Etisalat to fulfill Chairman Mohammed Omran’s goal of being “an active player” in a market that is forecast to approach 1 billion users by 2014. In June, Omran cited the possibility of acquiring a stake in billionaire Anil Ambani’s Reliance Communications Ltd. Idea, the nation’s best-performing wireless stock, has net debt that’s about a third of Reliance’s.

Al-Jarwan declined to comment on the status of possible talks with Reliance, India’s second-biggest mobile operator, which yesterday said a separate deal to sell its telecommunications towers had collapsed, and it had begun discussions with other potential investors. Omran said in June that the Abu Dhabi-based company was considering several opportunities in India.

Aditya Birla Group

India’s Aditya Birla Group controls Idea with a 46 percent stake in the company. Pragnya Ram, a group spokeswoman in Mumbai, declined to comment.

Idea advanced 3.9 percent to 74.50 rupees at 12:59 p.m. in Mumbai trading today. Reliance rose 0.3 percent to 163.35 rupees. Idea has gained 28 percent this year, while Reliance has declined 5.3 percent. Bharti Airtel Ltd., India’s largest mobile-phone operator, has risen 4.6 percent in 2010.

Etisalat owns a 45 percent stake in Etisalat DB Telecom Pvt., a venture with India’s DB Group. Etisalat DB got its phone license in 2008 and started services this year under the Cheers Mobile brand. It had 20,000 customers as of June, according to data from India’s telecommunications regulator, out of India’s market of 636 million wireless subscribers. China’s 805 million mobile-phone accounts make it the largest market.

Idea’s debt exceeded cash and equivalents by 96.5 billion rupees ($2.1 billion), while Reliance’s net debt was 284 billion rupees at the end of June, according to the companies. Idea added customers at a faster pace than Reliance in June, ending the month with 69 million subscribers. India’s mobile phone market is forecast to exceed 993 million users by the end of 2014, researcher Gartner Inc. said in a July 15 report.

Malaysia’s Axiata Group Bhd. owns 19 percent of Idea. Axiata isn’t “involved or aware of the expressed interest,” the company wrote in an e-mail. “We are unable to comment on behalf of Etisalat or Idea.”

To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net.

To contact the editors responsible for this story: Claudia Maedler at cmaedler@bloomberg.net; Young-Sam Cho at ycho2@bloomberg.net.

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