Can this Idea change your life ????

Abt Company:
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Idea Cellular:
6th largest cell operator + 8.5% market share.
11 circles : mainly delhi, Ap, Maharastra, Gujarat.
9 pending licenses + Uas for mumbai and Bihar.
has NLD license

Idea was started as a joint venture from AT&T, Tata and Birla,
The growth figures were somewhat subdued because of the fact that
shareholders quarrelled often on issues.. However before IPO, AB group
holds a 98% stake and they are very aggressive about this entity,
AB group has clearly stated that they want to be the leaders of which ever
business they are in and they have clearly consolidated in business where
they no more hold interest to them.

Offer details:
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2125 crores:
65-75 per share
12th - 15th Feb 2007.
J M Morgan Stanley and DSP Merill Lynch are the lead managers to the offer,
with Citigroup and UBS Securities as the co-book running lead managers.
Big Share services Private Limited.

Competitors:
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Hutch, Bharati, Tata tele, Rel Com, BSNL

Management:
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Aditya Birla Group.


Fund Usage:
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Expansion in newer circles.
Use for NLD Operations.
Redumption of Preference shares.


Positives.
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Pre-Ipo placement done at Rs 75/- part by Aditya-Nuvo
Indian telecom Market is one of the fastest growing in the world.
Market is suppose to increase further.
Uas in Bihar : mobile penetration in Bihar is low.
NLD license will allow Idea to use its own network for inter-cirle.
We have too many subscribers hoping from one network to other esp in pre-paid business.
Risks and Other Negatives
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Stake sale from Tata and pre-IPO Capital from FII was at a lower price of around Rs 40/-
Absense of Pan india presence.
Depending on others to provide roaming services.
Increasing Market share when bigger players like Bharati, Vodofone and Reliance
around is tough.
Minutes of usage per subscriber, Average revenue per user, and average revenue per minute are
all lower than other players.
vals:
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p/e works out to be 42.3 – 47.8,

p/e of Airtel is 40. Rcom is 34.5

MarktCap/Sales :


Mkt/Sales P/E EPS*
Airtel 8.39 (cm:
Reliance 7.12 34.5 (cm:
Idea 4.28-4.85 42.3-47.8 1.5-1.6 - (cm:


*Annualised EPS for 9 months ending dec :Rs 1.5-1.6

reviews read:
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(Capital Markets: CM,
Prabhudhar Liladhar: PL: Apply
http://www.business-standard.com/general/pdf/brokerrecos/100207_01.pdf
CLSA: Subscribe.
Hindu Businessline: Invest at Cutoff
Business Standard: Invest : Will scale with a commited management.
Emkay : Subscribe:
Batlivala and Karani: Good opportunity to enter Telecom sector.

Verdict :
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There may not a huge listing gain as P/E is a little high (higher than currently
listed peers.
However its probably a share to apply assuming that Birla's get to do what they plan to do.
Also the fact that the company is at a discount considering the the operating ratios
are better than say Airtel. Also the huge valution received by Hutch makes Idea a good
subscribe.. However if you don't subscribe you may not regret much.

An Idea may change your life .....

How did it fare:
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