Spice Communications Limited (merged with Idea Cellular)

Active

Prospective

Spice Communications Limited (Spice), previously known as Modicom Network and Spice Communications Private Limited, was awarded a 10 year cellular service license for the telecom circle of Karnataka and one for Punjab. The company operated under the brand name, Spice Telecom. In July 2006, Spice launched service in Gujarat. Spice was originally a joint venture between Modi Group (51%), Distacom (49%). The company had since undergone a few ownership changes. In March 2006, Telekom Malaysia Berhad acquired 49% stake in Spice for US$ 179 million from Deutsche Bank AG. Modi Group continued be the majority investor with 51% stake in Spice. The company committed to pay US$389 million in licenses fees for Karnataka and US$354 million for Punjab over a 10 year period. The term of the license was later extended to 15 years. However, like many other companies, Spice Communications faced difficulties in paying its license fees. To reduce the financial burden placed on the telecom operators, a new revenue sharing license fee structure was introduced with the New Telecom Policy in July 1999. This payment structure enabled all telecom license operators in 1999 to switch to a new 15% revenue sharing policy, provided they complete their payment on accumulating dues by January 31, 2000 and that both operators in the circle agree to switch over to the new system. The company committed US$241.5 million (net present value in 1996 dollars) before shifting to the new system in July 1999. Spice Communications paid a total of US$172.5 million towards license fee obligations by 1999. Motorola supplied the GSM base stations for the project and built the network. Siemens was the vendor for the switches and the microwave network. Spice Communications started services in both regions during the first quarter of 1997. Spice Communications embarked on a US$5 million optical fibre backbone project in the state with a total length of 840 km extending from Bangalore to Belgaum and from Bangalore to Mangalore. The Multilateral Investment Guarantee Agency issued a US$9.6 million insurance policy to Motorola for its role in establishing a mobile cellular network in Punjab and Karnataka. In June 2008, Idea Cellular had bought a controlling interest in Spice Communications in a cash and share transaction. Idea had spend cash of up to $886.5 million and issued new shares. http://spiceindia.com/press_releases9.shtml Email sent to info@distacom.com on 7/22/03 Fax sent to Mr. Umang Das, Spice Communications Limited, 91 11 2644 4221/2643 9963 7/22/03 In 1999, the company invested US$80 million towards network expansion. In 2002, the company invested an additional $20.8m in Punjab and $10.3 in Karnataka to upgrade and expand its network.

Information and communication technology (ICT)

World Bank Group

Project

Telecommunications, Government, Manufacturing (Industrial)