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Monday, May 15, 2006

Spice IPO likely by Nov, lines up Rs 2000cr capex

Spice Telecom may join Bharti Airtel and Reliance Communications Ventures (RCoVL) on the bourses, reports The Economic Times.

The telco, which offers mobile services in Punjab and Karnataka, has been valued at USD1 billion and may go for an initial public offer, IPO by November ’06.

The board of Spice is being reconstituted after Telekom Malaysia acquired 49% stake in the company. “The new board will be in place this week. It will subsequently consider listing of Spice,” the sources added. The valuation of Spice, which has around 2 million users, has been done by Deutsche Bank and Morgan Stanley.

It translates into USD 500 per subscriber and is half of what Vodafone paid for 10% stake in Bharti (USD 1,000 per subscriber). Bharti offers services in all the 23 telecom circles. If the Spice board decides to go ahead with the IPO, it will be the fourth telco to get listed after MTNL, Bharti and RCoVL.

Hutchison Essar and Idea Cellular are also contemplating similar moves. But no announcements have been made so far. Meanwhile, Telekom Malaysia has completed the acquisition of 49% stake in Spice by paying around USD 180 million to the company.

The new nine-member board will have three representatives each from Telekom Malaysia and BK Modi’s MCorp, which owns 51% in Spice. Three others will be independent directors. The new board will have Mr Modi as chairman and Spice MD Umang Das and Dilip Modi as members.

Yusof Annuar Yaacob, Prabhakar NK Singam and Shridhir Sariputta Hansa Vijayasurya will represent Telekom Malaysia. The three independent directors include Ernst & Young ex-chairman KN Memani and ITC former chairman KL Chugh, said sources. MCorp will look after day-to-day management in Spice.

The telecom company has also chalked out a Rs 2,000 crore (Rs 20 billion) plan for expansion in Karnataka and Punjab over the next two years. “Spice has arranged USD 50 million loan for capex from Development Bank of Singapore, DBS. The rest will be funded through internal accruals,” said sources.

Spice had also raised a USD 215 million debt from DBS. It has been used to repay shareholder and vendor loans. “The company has paid all debts as part of its restructuring exercise,” sources said.

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