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Our Bureau

To invest Rs 10,000 cr for expansion

FUNDING EXPANSION: Mr Dilip Modi, Chairman, Spice Telecom, addressing a news conference in the Capital on Monday. — Kamal Narang

New Delhi , Sept. 4

Spice Telecom, cellular service provider in Punjab and Karnataka, is lining up an initial public offer to raise as much as Rs 1,400 crore before the end of the year.

The company, which will dilute 20 per cent stake through the IPO, is planning to invest $2 billion (about Rs 10,000 crore) for expanding its telecom network into new areas.

Public offer

Spice has applied for a unified access licence for 21 more circles to give the company a pan-India footprint. In order to finance the plans, the company may go for a follow on public offer by December 2008.

Announcing the IPO plans, Mr Dilip Modi, Chairman, Spice Telecom, said that JP Morgan, Deutsche Bank and Enam Securities have been appointed as merchant bankers for the upcoming IPO. He said that the second round of float would depend on the approval of the 21 unified licences that the company has applied for.

Growth plan

Spice Telecom is a 51:49 joint venture between Mr B.K. Modi promoted ModiCorp and Telekom Malaysia. The company has also applied for long distance telephony licences. Spice has lined up an investment of $500 million for its existing operations.

"This growth plan has been carved out after the restructuring of the company and finalisation of partnership between internationally renowned Telekom Malaysia (TM) and Indian partner MCorp Global. The financial restructuring has been finalised by the Development Bank of Singapore along with a consortium of several other leading International Banks," said a press release.

Results

Apart from cellular services, Spice has its own brand of handsets, value added offerings and organised mobile Retail. After the recent restructuring at the shareholders' level and partnership with TM, there has been a significant improvement in the results. Over the last 12 months ending June 2006, the operations have shown a 40 per cent increase in subscriber base. Spice posted revenue of Rs 734 crore ($158 million) and earnings before interest, taxes, depreciation and amortisation (EBITDA) of Rs 224 crore in the year ended March 31.

The company has a valuation of $1.2 billion (Rs 5,500 crore) at present. The company is expecting its valuation to surge to $2 billion next year and $4 billion by 2009 after it acquires a national footprint.

More Stories on : Telecommunications | Outlook | IPOs

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