PE firm Providence to exit Idea Cellular; shares drop 4%

Private equity firm Providence Equity Partners is likely to sell its stake and exit investments in Idea Cellular, a report said.

On Monday, after the news flashed on CNBC TV18 about Providence's plans of exiting Idea Cellular, the exchange sought clarification from the telecom company. 

A reply is awaited from them. 

The shares of the company plunged nearly 4%. At 1259 hours the shares of the company were trading at Rs 106.40 per piece, down 3.58% or Rs 3.95 on BSE. 

The development comes soon after Vodafone Group Plc confirmed they there in talks of merging its India operations with Idea Cellular. 

Last year in June, Providence had decided to sell almost half of its stake in Idea in a block trade for about $209 million (about Rs.1,400 crore). As per a LiveMint report, Providence  had put around 3.4% stake on sale. 

As of March 31 , the fund held around 6.8% stake in the telecom company, according to data from stock exchanges.

The private equity firm could also be looking to exit because of the weak performance of Idea Cellular in the December-ending quarter. The company reported a consolidated net loss of Rs 385.5 crore in its third quarter compared to net profit of Rs 655.5 crore in the corresponding period of the previous year, stating free voice and mobile data promotions of Mukesh Ambani's Reliance Jio as main reason. 

Idea Cellular said, “The Indian mobile industry witnessed an unprecedented disruption in the quarter to October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector."