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A significant realignment of promoter holdings could be under way at Idea Cellular, the three-way telecom venture among the Tatas, Birlas and US giant AT&T Wireless.
Asia, with the exception of China, is no longer priority for the $16.69 billion US company. It has informally indicated to its two Indian partners that it will not invest any more in Idea Cellular.
It has also asked a coordination committee of the three partners to work out the modalities of its exit.
Senior executives at both the Indian partners confirmed that they had been informally told this. "AT&T Wireless is looking at the possibility of exiting India. There's nothing in writing," a member of Idea Cellular's board said.
Another executive at one the partners' firms, however, said: "Though India is not on AT&T Wireless' priority list, it is not correct to say that it is pulling out of Idea Cellular now. Nothing has been finalised."
AT&T executives were unavailable for comment. Idea Cellular is also slated to file a draft initial prospectus with the Securities and Exchange Board of India (Sebi) within the next two or three weeks, possibly by February-end.
Sources close to the Idea promoters said: "The issue size could be between Rs 1,000 crore (Rs 10 billion) and Rs 1,200 crore (Rs 12 billion).
About 10 per cent could be an offer of sale from the promoters. The remaining 90 per cent will be an issue of fresh shares."
The IPO, however, is expected only after the general elections. AT&T could hawk a part of its 33.3 per cent stake in Idea through the IPO.
Even if it does, it will not be able to exit Idea for some time -- Sebi norms do not allow wholesale exit within a year of any IPO. All this suggests that AT&T Wireless' exit from Idea will take quite some time.
The Birlas also hold an equal stake in Idea, while the Tatas have over 30 per cent and US insurance giant AIG holds less than 3 per cent in Idea.
Sources close to the Idea promoters said it was still undecided how the remaining AT&T stake would be bought out, another issue that could delay the US major's exit from Idea.
The options being currently weighed are the Tatas and Birlas buying out AT&T's residual stake or roping in another strategic partner to replace AT&T.
The indecision on this issue is also due to the two Indian partners' lack of clarity on where they stand on the future of Idea.
The Tatas have made it plain that the group will focus on providing code division multiple access services through Tata Teleservices.
The Birlas had earlier indicated their desire to exit Idea but reversed their position in late 2003 and agreed to pump in money into additional equity, required to expand Idea's operations.
It is not clear whether the Birlas wish to continue in Idea Cellular over the long haul.
In a press release issued in Redmond in the US on January 22, AT&T Wireless said its board was exploring "strategic alternatives." Several suitors have since then lined up.
Hanging up