BSNL IPO hits roadblock!

The much awaited $10 billion BSNL IPO has hit a road block before even taking-off. Communications minister A Raja's offer to give all the 3 lakh employees 500 shares at Rs 10 each has been rejected by the Union. This would have fetched each employee a minimum of Rs 1.5-2 lakh at the time of BSNL’s listing on the bourses.

If the share were to list somewhere between Rs300-400, it would give BSNL valuation of $37-45 billion which is way lower than $100 billion what the company has been claiming since January.According to analysts, the $37-45 billion valuation is a fair one. BSNL has about 81 million subscribers, 10 million more than the country’s largest private operator, Bharti Airtel, which is valued just over $38 billion. However, a top BSNL official said that this was only the book value of the company and did not include its asset value.

Read more in The Economic Times article.

Tata Comm readies $2bn capex

Tata Communications, a global voice and data telecom provider with annual revenues of $2 billion, has identified ‘20 top emerging markets’ that will drive its next phase of growth. The firm earns two-third of its revenues from overseas businesses. In the last six years, it invested about $1 billion to fund acquisitions (Tele Globe, a stake in Tata Teleservices) and setting up of new submarine cable.

The growth strategy going forward revolves around regions where global multinational companies are setting up operations. That includes countries in Latin America, Africa and South East Asia and Central and Eastern Europe. VSNL will set up infrastructure that will support various telecom enterprise solutions, including tele-presence, manage data services, messaging etc.

Between 2009 and 2011, the company has charted a 12-15% compounded annual growth rate. This means, it will double its revenues to $4 billion and ebitda will grow 20% to about $800 million by 2011-12.Tata Communications, meanwhile, is also investing in a major way in India. It has earmarked a $2 billion capex over three years, its most ambitious plan in its history.For setting up fresh capacities in submarine cable undersea, the company will spend $500 million, Wimax for broadband connectivity for a captive market of 30 million potential subscribers will entail an expenditure of $500 million. Another billion dollars will go for setting up data centres and expansion of its fibre network.

Read more in The DNA Money article.

Bharti Airtel, SingTel to float SPV for MTN

Billionaire Sunil Mittal, the founder of Bharti Airtel, plans to set up a separate company in partnership with Singapore Telecommunications (SingTel) that will be the vehicle for acquisition of the South Africa-based MTN Group.

The special purpose vehicle (SPV) will raise funds, including bridge loans. The company will later explore the option of selling American depository receipts (ADRs) or global depository receipts (GDRs) to repay the bridge loan.The SPV may be registered in a tax-haven country, like Mauritius or Bahamas.

The move to float an SPV will help Bharti Airtel to continue being listed on Indian stock exchanges, while MTN's promoters will be given a stake in the SPV. The quantum of the stake will depend on the cash-share ratio, which is yet to be finalised between Bharti and MTN. Bharti Airtel would raise funds by diluting the equity of the SPV and, if needed, the promoters' stake in Bharti and that of its partner SingTel to part-finance the deal.

Read more in The Business Standard article.

Related Story:
Bharti, MTN in talks for 50:50 cash-share deal
Bharti may rope in SingTel for MTN buy

Shyam closes in on Rs 5,000 cr infra-sharing deal with RTIL

In what could be the first active infrastructure sharing arrangement in the country, Russian communications major Sistema-controlled Shyam Telecom is learnt to be in advanced talks with Reliance Telecom Infrastructure Ltd (RTIL), Reliance Communications’ hived off tower arm, for a Rs 5,000-crore deal spread over 10 years.

As per the arrangement, Shyam Telecom will offer mobile services by riding on RTIL’s infrastructure—both active and passive—for 10 years. Shyam was recently allotted CDMA start-up spectrum across 12 circles, covering 16 states.

This deal will enable the CDMA operator to launch operations without setting up its own network. The Shyam-RTIL model could be the first of more such deals as new entrants try to save on time taken to set up and roll out networks across the country.

Other new players such as Datacom, Unitech, S Tel and Loop Telecom are also learnt to be exploring such business models, which offers them ready-to-use quality telecom infrastructure, which in turn, enables them to reduce their time-to-market and accelerate their network deployment. Industry experts say that roll-out dates can be advanced by as much as 8 - 12 months if new players adopt this model.

The entry of several new players, which opens the potential for many such infrastructure sharing deals in the coming months may also result in stand-alone tower firms such as RTIL, Indus (a tower JV between Bharti, Vodafone and Idea) and Bharti Infratel justifying their high valuations.

Read more in The Economic Times article.

Tata Communications to raise $1bn

Tata Communications, the country’s largest, long-distance telephony company, plans to raise $1 billion (Rs 4,000 crore) to partly fund its expansion plans for the next three years. It has already approached banks to raise $350 million within a month.

In February, the company, formerly known as Videsh Sanchar Nigam (VSNL), said that it would spend $2 billion in the next three years to complete additional submarine cable systems connecting emerging markets across the world and for its WiMax services.

Bank of America is one of the banks working out the mandate for raising $350 million for the first year of the three-year expansion plan.The company has options such as foreign currency convertible bonds, qualified institutional placement or dilution of stake in one of its subsidiaries.

Read more in The Business Standard article.