Idea Cellular gets nod to raise foreign holding to 74%

Ahead of its proposed public issue to raise Rs 2,500 crore, A V Birla Group telecom company Idea Cellular is understood to have got government clearance for foreign investment of up to 74 per cent equity.

The proposal by the company, in which foreign investment stands at 47.55 at present, is believed to have been cleared by foreign investment promotion board, allowing it to enhance the foreign holding to 74 per cent.

As per norm, foreign direct investment in telecom companies up to 49 per cent is on automatic route and FIPB approval is be required if the foreign investment has a bearing on the overall ceiling of 74 per cent, it said.

This comes in the days after idea cellular got licences for Mumbai and Bihar.

The company is expected to get the approval from SEBI for its draft prospectus in the next 10 days and is likely to hit the market in the second week of February. The company has got two LoIS for Mumbai and Bihar.

As per as the new foreign investment regulation in the sector, telecom companies are required to declare their composite foreign holdings. The government has also allowed foreign institutional investors and overseas venture capital funds to invest in the Aditya Birla Group's telecom venture's upcoming Rs 2,500-crore initial public offer.

Idea had filed a red herring prospectus with the Securities and Exchange Board of India (SEBI) for the entirely book-built IPO. The Aditya Birla Group has already divested nearly a 33 per cent stake to a handful of investors -providence equity partners of the US, India's Chryscapital, the UK's TA Associates and GLG Partners and Citigroup.