Plan B after sale of spectrum: Videocon to focus on other businesses

This business is already earning an Ebitda of Rs 125 cr and we plan to take it up to Rs 500 cr by 2020: Venugopal Dhoot

A day after selling the spectrum of its two circles to Idea Cellular for Rs 3,310 crore, Videocon Telecommunications on Wednesday said it would now focus on its non-spectrum related businesses such as enterprise solutions and mobile wallet to earn around Rs 650 crore of profits by 2020. On Tuesday, Videocon had also said it would sell its other four circles in the next few weeks. It has, however, no plans to sell the Punjab circle, its chairman Venugopal Dhoot had said. With this, the company will exit the wireless telephony business in six circles.

After exiting these circles, company officials said Videocon would focus on offering enterprise solutions to its clients. It would also enter smart-city solutions and mobile wallet business, they added.

The company has a fledging national long distance (NLD) and international long distance (ILD) businesses. The latter carries 10 per cent of India's ILD on its network. "Our topline for NLD/ILD is Rs 1,000 crore with earnings before interest, tax, depreciation and amortisation (Ebitda) of Rs 100 crore. We will continue to grow in this business," said Dhoot.

On its broadband business, Dhoot said the company is running the business in Punjab under the brand name 'Connect Broadband' and has already emerged the market leader. "This business is already earning an Ebitda of Rs 125 crore and we plan to take it up to Rs 500 crore by 2020."

Videocon, which won spectrum in last year's auction, became the first company to sell off radio waves. With the launch of Reliance Jio, the going for smaller players will become increasingly difficult. According to analysts, other small players will follow Videocon to exit the sector. While RCom has already decided to take over Sistema's India operations with itself in an all-stock deal, the Ambani brothers have agreed to share spectrum among their companies.

Since the Supreme Court cancelled 122 telecom licences in 2012, Videocon took several steps to rebuild its telecom business. This included bidding only for lucrative circles in the auction conducted by the government last year and cutting costs across the telecom vertical. Meanwhile, the banks started knocking on its doors for the loans taken for the telecom rollout of pre-2012 era.

With the proceeds of the sale of its circles, the group is hoping to reduce its debt worth Rs 39,000 crore and focus only on profit-making verticals.

On the company's plan for Punjab's GSM Business, Dhoot said it achieved one of the fastest Ebitda positive in the entire telecom sector. "Our customer market share in Punjab is 9.2 per cent and growing. We plan to offer 3G-based services with one of partner telcos."