Videocon in talks to sell 26% in telecom arm

Videocon on Monday said it was negotiating with foreign companies for sale of a 26 per cent stake in its subsidiary, Videocon Telecommunications. Chairman V N Dhoot hoped the deal would be in place soon.

Speaking to reporters on the sidelines of an Assocham conference here, he said: “We are looking for a total valuation of Rs 15,000 crore.” He declined to say if it would be a strategic sale or not.

There were earlier reports on Videocon’s talks with South Korean company SK Telecom, after failed ones with UAE’s Etisalat and Turkey’s Turkcell.

Dhoot said several investors from the US, Japan and Europe were trying to enter the Indian market but could not do so due to valuation issues.

Videocon Telecommunications is a 100 per cent subsidiary of Videcon Industries, with 1.9 million subscribers and a market share of 0.31 per cent, according to Telecom Regulatory Authority of India and June numbers.

It offers GSM mobile services under the brand name Videocon. The services are up in Tamil Nadu, (including Chennai), Punjab, Haryana, Mumbai, Gujarat, Kerala, Madhya Pradesh, UP East, UP West and Himachal Pradesh and will soon be present across the country.

A Mumbai-based analyst, who did not want to be named, said Videocon, which launched its services in March, is the least attractive player to buy into. “Apart from the spectrum, the company does not have much to offer because it does not have many subscribers. The company may need this money to get a foothold in the sector and expand operations, which is why they want to sell stake in their company,” he added.

“The investor who comes in, will be buying into a company which is likely to make losses for the next three to five years. Telecom rates and average revenue per user are still under pressure,” said Harit Shah, telecom analyst, Karvy Stock Broking.