Idea Cellular raises Rs 3,750 crore for upcoming spectrum auction

Idea Cellular, India's third-largest telecom operator, promoted by Aditya Birla, raised a total of Rs 3,750 crore through qualified institutional placements and preferential shares. Of this, Rs 750 crore was a private placement to Malaysia's Axiata Group Berhad. The amount will be used by the company to fund the upcoming spectrum auctions.

The issue saw 62 per cent of its investments towards the QIP coming from foreign investors and the rest was towards domestic investors. Each share was given at an issue price of Rs 134, at a premium of Rs 124.

"DSP Merrill Lynch Ltd, Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Co Pvt Ltd and Standard Chartered Securities (India) Ltd were the global co-ordinators and Book Running Lead Managers, and Axis Capital Limited acted as Book Running Lead Manager to the Issue," said a statement from the company.

Amarchand & Mangaldas & Suresh A. Shroff & Co, AZB & Partners and Jones Day were the legal advisors, and Deloitte Haskins & Sells LLP was the auditor.

"The fund will help us strenghten our balance sheet, and reduce our debt equity ratio, which will allow us to take additional debt (if required). It will give us more leverage," says Rajat Mukarji, Chief Corporate Affairs Officer at Idea Cellular.

In the next couple of years, licence and spectrum in nine out 23 circles for Idea Cellular will expire. The auctions are expected to happen by the end of this year. Mukarji said that the company is getting ready for the auctions ahead.

In the previous auction in February of the 900 Mhz spectrum and 1800 Mhz spectrum band Idea paid Rs. 10,674 crore. It also annouced that it will start 4G services using the 1800 Mhz band, which is the globally accepted band to offer fourth generation services.