Big FM to list on BSE in 2 months

Preparatory to third phase of FM radio licence auctions

To infuse funds for its business expansion and to independently manage the operations, Big FM, the country’s single-largest private FM radio company in terms of number of licences to operate radio stations (45), will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) within the next two months.

It will be the second FM radio operator to have listed on the BSE, after Entertainment Networks India Ltd that operates its radio business under the Radio Mirchi brand.

After listing, Reliance Unicom will be the holding company of the Big FM brand. Reliance Unicom may go in for an initial public offer (IPO), too, say industry sources. So far, the radio business of the Reliance ADA group was clubbed with Adlabs Films, its film exhibition arm that is already listed on the BSE.

The move to list Big FM comes shortly after the Ministry of Information and Broadcasting (I&B) gave its no-objection nod to Adlabs Films’ proposal for demerger of the radio operations from its overall business. Adlabs is the licence holder of Big FM. Post-demerger, the licences to operate the 45 Big FM stations will also be transferred to Reliance Unicom.

The listing of Big FM gains significance because the government is close to finalising the third-phase roll out of private FM radio, where it will put on auction around 600 new FM stations across 200-plus towns. The first and second phase of FM radio auctions in 2000-01 and 2005-06 generated a combined revenue of around Rs 1,800 crore for the government by way of licence fees.

“So far, there has not been a decision on whether to bring in an IPO of Reliance Unicom,” Tarun Katial, COO, Big FM, told Business Standard. “The third phase of expansion of FM radio in the country will further help the industry grow. It interests us, too...all future funding for our radio operations will come once we are listed,” Katial said.

After the listing, said Ismail Dabhoya, senior vice president, (finance and commercial) for BIG 92.7 FM: “Reliance Unicom will issue shares in the ratio of 1:1, where we will give one share for every share held by the shareholder in Adlabs Films Ltd.”

So far, Adlabs is said to have invested around Rs 1,200 crore in Big FM’s 45 stations.In the first nine months of 2008-09, Big FM clocked a revenue of around Rs 142 crore, contributing around 20 per cent to the toplines of Adlabs.

“However, Big FM had a significant contribution (around one-third) to the losses incurred by Adlabs Films for the nine-month period of 2008-09...once Big FM is listed, it will also be able to attract significant foreign investors within the permissible 20 per cent foreign investment currently allowed in the FM radio space,” said an analyst who tracks media.

Citing the benefits of listing Big FM, Katial said: “This will help us attain financial flexibility to independently raise resources for future growth. Of course, it will lead to a substantial unlocking of shareholder value, too.”