The imminent initial public offer (IPO) of Idea Cellular, the three-way combine between the Tatas, Birlas and AT&T Wireless, is being seen as critical to the future of the holdings of the Tata and Birla groups in the cellular phone company.The company is the result of the merger of the operations of Birla-AT&T and Tata Cellular. The Birlas and AT&T hold about 33 per cent each while the Tatas control 31.85 per cent. The balance stake of 1.15 per cent is owned by AIG.Idea Cellular is looking at the second quarter of the current year to go public. The company’s equity base is approximately Rs 2,600 crore. JM Morgan Stanley and DSP Merrill Lynch have been given the mandate for the IPO.Investment banking sources reckon that the fate of the holdings of the two groups in the cellular services provider would be decided once the details of the pricing of the IPO become clear. Over several months, there has been speculation both about the Tatas wanting to exit the venture and also about similar intentions by the Birla group. None of the two groups have, however, commented officially on their intentions relating to the Idea stake.‘‘While there are no clear signals from either side about what they want to do with the Idea holdings, it may make sense for both to exit through the IPO route if the pricing is right,’’ a frontline investment banker closely tracking the developments said.Neither Tata group nor Birla group officials were available for comment on the issue.From the Tata perspective, industry sources say with the Tata group deciding to clearly bet on the code division multiple access (CDMA) technology, Idea may not be all that relevant any longer to their plans. On the Birla side, with cement and core businesses dominating future strategy, corporate circles aren’t sure about where Idea fits in as far as the Birla group is concerned.But a critical variable in all of this, say sources, would be the fate of the 33 per cent AT&T Wireless stake, which has now become uncertain following the global changes expected to take place on the AT&T front over the next few days. Vodafone and Cingular have emerged as potential bidders for AT&T, and that is being keenly watched in India. A decision on this is expected anytime now.Corporate sources say, if Vodafone buys out AT&T, then the entire complexion on the Idea front may change. This is because the entry of Vodafone into Idea will also give it a readymade platform to storm the Indian cellular phone market. Vodafone has only just exited from its 21 per cent stakeholding in RPG Cellular, which has been sold to Aircel.Idea cellular is AT&T Wireless’ only investment in India. The company recently exited its 49 per cent holding in BPL Cellular for a small sum.
