Tatas threaten termination over Idea

‘‘We have found the Birlas in breach of shareholders agreement and we have brought this to their notice. They have also been told that as per rights in the shareholders agreement, we can proceed to acquire shares in Idea, and at a price which is also to be determined as per rules laid down in the shareholders agreement,’’ senior Tata Group executives told The Indian Express on Wednesday.

At the investors meet, the AB Birla Group had disclosed Idea’s revenues and EBIDTA from 2002 to 2005, and estimates of its revenues until FY 2006. Idea’s subscriber growth and projections were also disclosed.

In a show of force against this, the Tatas have served a ‘‘termination notice’’ to the Birlas, giving them 90 days until they start buying over shares in Idea Cellular.

The Birlas, however, rejected this ‘‘notice’’ on Wednesday, saying they have heard about the Tata offer for Birla shares from the media, and not from any official communication.

The notice brings matter to a odd U-turn, since only last week, the Birlas had offered to buy Tata’s holding in Idea. Incidentally, both companies enjoy the first right of refusal in case any partner wants to cash out in the JV.

The Birlas, who own 50.15 per cent shares in Idea, want the Tatas, who own about 48.39 per cent, to offload their stake in the high-growth company to meet Department of Telecom (DoT) and regulatory rules. Both sides want the DoT to sort out the dispute.

‘‘The licensor (DoT) has to take a call on whether the Tatas, who already have a nationwide presence in wireless telephony, can have significant stake in Idea Cellular or not,’’ said the Birla official.

Tata’s notice is the third set of letters going between the Tatas and Birlas over Idea. The first salvo from the Birlas accused the Tatas of delaying Idea’s valuation. The second volley accused the Tatas of violating the shareholder agreement.

The Birla Group says the Tatas raised their holding in Idea through Apex, a Tata Industries subsidiary, which bought 16.7 per cent in Idea from AT&T. The Birlas say they were not told about this transaction and complained to DoT.

The Tatas, on their part, deny violation of licence terms, and say they will offload stakes in Idea when they get the right value for it.