Mumbai: Spice Communications Ltd, part-owned by Telekom Malaysia Bhd., will announce this week the amount it plans to raise from an initial share sale, to expand beyond states of Punjab and Karnataka.
“In the next two days we will finalize the price band,” Spice managing director, Dilip Modi, said on Monday in a phone interview, without disclosing the amount the company may seek to raise. “We’ll float the IPO before the close of June.”
Bangalore-based Spice plans to sell shares at Rs48 ($1.17) each, valuing the company at about $750 million, the Edge Weekly reported on Monday, citing an unidentified person familiar with the plan. The company has the stock market regulator’s permission to sell about 138 million shares.
Spice is seeking funds to grow as overseas rivals, such as Vodafone Group Plc., deepen their presence in the world’s fastest growing wireless market. India is adding almost six million mobile phone users on an average each month as the cheapest call rates in the world of as low as 2 cents a minute lure customers.
At the price reported, the sale would fetch Rs662 crore. Spice had planned to raise as much as $300 million (Rs1,230 crore) selling up to 20% of its equity, it said in September 2006.
Modi declined to comment on the Edge report. Spice, which provides mobile phone services in two of the 23 zones that make up India’s telecommunications industry, is majority controlled by the B.K. Modi group. The company has three million users.
Spice, which began operations in 1997, competes with local rivals Bharti Airtel Ltd, Hutchison Essar Ltd, Reliance Communications Ltd and Bharat Sanchar Nigam Ltd Spice has applied for licences to offer mobile phone services in 20 additional zones and sought permission to provide national long-distance and overseas call services in India.
Modi also declined to comment on media reports that Spice and larger rival Idea Cellular Ltd are in merger talks. Idea Cellular, controlled by billionaire Kumar Mangalam Birla, has networks in 11 zones in India. The company sold first-time shares at Rs75 each in February that rose as much as 26% on their debut as investors sought to tap strong growth.
Idea shares fell Rs2.8, or 2.4%, to close at Rs115.55 on the Bombay Stock Exchange.
India will probably have 500 million telephone users by 2010, compared with 218 million at present. Almost 80% of the customer base uses mobile phones and most new users are also likely to opt for wireless connections, according to the Cellular Operators Association of India.
Carriers, such as Bharti and Hutchison Essar, have lined up $15 billion in expansion plans in the next three years as they increase coverage in communication-starved rural areas, where telephone penetration is less than 6%.