Distacom exits Spice Telecom

Deutsche Bank, Ashmore fund buyout

Distacom, the Hong Kong-based private equity fund which held 42 per cent stake in the B K Modi promoted Spice Telecom, has exited the company. This stake has been absorbed by the B K Modi Group along with Ashmore Investment Management and its parent Deutsche Bank.

While the B K Modi Group increases its stake to 36 per cent from 22 per cent, the remaining is being held by the other two financial firms. No financial details were made available on this deal. Distacom had invested around $100 million over the years in this firm and according to Spice, "both parties are happy with the deal."

Spice Telecom has close to 15 lakh subscribers in Punjab and Karnataka circles and has a topline of around Rs 650 crore with EBIDTA of Rs 200 crore. It currently has a debt of close to $120 million.

Private equity investors such as Darby (part of Franklin Templeton) and AIG Emerging Markets Fund who hold 15 and 21 per cent stake respectively will also eventually be bought out.

B K Modi, chairman, Spice Telecom, said that after this consolidation, he will look for a strategic investor to divest 49 per cent in the company.

"We have gone in for a total restructuring of the company and most of the loans has been restructured. Ever since we started operations around a decade ago, the Punjab market has been good for us with close to 12 lakh subscribers. However, in Karnataka we lost out and we have around 3.3 lakh subscribers. After this consolidation, we intend to strengthen our presence and we plan to invest close to $200 million over the next three years in network expansion and consolidation," Modi said.

The Karnataka circle, post this restructuring, has a new COO in Navin Kaul who comes in from Spice's Punjab circle. Modi added that his holding company MCorpGlobal will stand guarantee for further revolving credit of $45 million.

Added Kaul: "We will increase our thrust in the Karnataka market and we aim to be the second largest player in due course here. We have stepped up our rollout of network across the state and we are going to further strengthen the existing network by adding over 300 towers in the next 3-6 months."

The Spice brand will also be relaunched to focus it as an ICE (information, communication and entertainment) brand, he added.

B K Modi lashes out at NLD, ILD 'cartel'

B K Modi on Tuesday lashed out at the national and international long distance operators terming them as a 'cartel'.

Speaking to the media he said: "It is a big cartel out there and it is hurting regional players like ours. If our subscribers go on national and international roaming, we have to pay a fee for the roaming service we offer to the NLD and ILD players. Currently, this cost is pretty high and is affecting our revenues."