India's Bharti in talks to buy Spice Cell

By Staff and wire reports

NEW DELHI, India -- Leading Indian telecom firm Bharti is in talks to acquire control of mobile operator Spice Cell, according to India's Economic Times.

Bharti would consider an acquisition if it lost out in the bidding for the fourth cellular operator license for Calcutta, the paper said, quoting unnamed company sources.

The Indian government is auctioning licenses for the slot of the fourth cellular operator in the country's 21 telecom zones. It is due to open the second round of price bids later on Monday.

Bharti is reported to be negotiating a "100 percent all cash buyout" of Spice Cell from ModiCorp, a holding company of India's B.K. Modi family.

ModiCorp along with associates holds a 51 percent stake in Spice Cell while the rest is held by Hong Kong's Distacom.

The Bharti group and a company belonging to India's Reliance are currently vying for the Calcutta license.

Bharti, a New Delhi-based unlisted group, is one of the largest and most aggressive telecom groups which operates mobile networks in New Delhi and the states of Karnataka, Andhra Pradesh and Himachal Pradesh.

The group also runs a fixed-line network in Madhya Pradesh.

India's mobile market has surged 89 percent in the last year to reach a total of 3.7 million subscribers by the end of April 2001.

The Cellular Operators' Association of India (COAI) said the growth in usage stems from a more favorable licensing environment that in turn encouraged a fall in airtime rates.

Cellular rates in India have fallen by 50 to 75 percent over the last two years to hit a current rate of about $0.04 per minute on average.

Industry watchers say rates will drop even more when additional competition is introduced after the August cellular license auctions.

Reuters contributed to this report.