India’s Videocon Industries reportedly plans to divide its telecoms unit into six separate companies as it prepares to exit four service areas.
India’s Videocon Industries (NSE:VIDEOIND) reportedly plans to divide its telecoms unit into six separate companies as it prepares to exit four service areas.
The company, founded by Indian billionaire Venugopal Dhoot, is likely to consider the demerger proposal at a board meeting at the end of the month, the Economic Times reported.
The company, advised by KPMG, is seeking a total enterprise value of about Rs100bn (US$1.54bn) for Videocon Telecom.
Under the proposal, the six new companies would issue equity shares to Videocon shareholders. Norway’s Telenor India has previously been linked to interest in a stake in Videocon.
Gurgaon, Haryana-based Videocon Telecom is the tenth largest of India’s 12 mobile network operators with about 7.13 million customers as of March 2015, equal to a 0.72% market share, according to telecoms regulator TRAI. It is dwarfed by heavyweights Bharti Airtel, Vodafone India, Idea Cellular and Reliance Communications. Its Punjab mobile unit is already run via a separate, wholly-owned telecoms arm known as Quadrant Televentures.
Videocon has been considering selling spectrum to help tackle its debt pile, which as of last month stood at Rs225bn (US$3.47bn).
However, Dhoot reportedly believes that given different spectrum valuations and uncertain tax rules, it may be more pragmatic to sell UP-East, UP-West, Bihar and Gujarat – the most lucrative of its six markets – on an individual basis. It has no immediately plans to exit Haryana, Madhya Pradesh and Punjab.