Spice Communications’ (Spice) buyout by Idea Cellular Ltd (Idea) does not seem to affect the Indian mobile phone market. But the deal works wonders for the Birla group as it finally finds a firm grip in a few significant markets.

Idea has acquired 40.8% in Spice Communication and has plans of an open offer with Telecom Malaysia International (TMI) of a further 20% stake in Spice. Promulgating the consolidation trend in the telecom sector the exchange ratio would be 49 shares of Idea for every 100 Spice shares. Idea is supposedly making a preferential allotment of 464.73 million equity shares (at a price of Rs. 156.96 per share) to TMI. Sources say Idea will pocket $ 1.8 billion through the equity sales to TMI. 800 million has been invested in acquiring Spice while the remaining 1 billion will be invested in expansion activities. The partnership with Idea gives the Malaysian company access to over 44 million subscribers and a presence in 10 countries.The combined subscriber base of Spice and Idea adds up only to 31 million compared to the 37 million BSNL subscribers. This leaves them at 5th place amongst leaders Vodafone, Airtel and Reliance. With a 11% share of the total mobile subscribers in the country, Spice and Idea.

Till last month Idea was a leader in Maharashtra and Kerala, and will go on to add Punjab, Madhya Pradesh and Western Uttar Pradesh after the deal. While Idea rules the GSM sector in Madhya Pradesh it stands 3rd in Gujarat and Andhra Pradesh. Idea lacks any presence in major metros like Delhi and Tamil Nadu, and eastern states like Bengal, Orissa and Bihar.

The most surprising part of the entire deal was that it devised and finalised over the phone.