The RPG group and Airtouch Vodafone, which were in an advanced stage of negotiation with BPL and Hutchison to offload a part of their respective stakes in RPG Cellular, which owns the Chennai metro cellular licence, have shelved their sale plans. The RPG group owns a 68 per cent stake in RPG Cellular, while AirTouch Vodafone and Skycell Mauritius hold around 21 per cent and 11 per cent, respectively.
"We have decided against selling the 49 per cent stake in RPG Cellular owing to the recent changes in the Indian and global telecom markets and our decision to refocus in the telecom services area," PK Mohapatra, president and CEO (communication and infotech sector), RPG group, told Business Standard.
"Though we have a presence in the Chennai circle only, cash flow has been encouraging for the company. Operating profits a month were to the tune of around Rs 3 crore," he added.
"As the global telecom industry is facing tremendous pressure due to its exposure in the new telecom areas, we may not get a good partner who could increase the shareholder value. Our decision to keep the cellular business a part of our core businesses is in line with our long-term vision," Mohapatra said here on Tuesday.
The RPG group has decided to expand the business with a total outlay of Rs 125 crore and will be raising this capital from the financial institutions as long-term debt. "A part of this fund will be utilised to restructure the company's existing debt as well. We will complete the fund raising programme shortly," Mohapatra added.
After the recent merger of the Birla-Tata-AT&T combine with BPL, there has been widespread speculation in the market that small cellular players, especially operators in single circles, will come under immense pressure and in all probability, sell their licences to stronger players.
During the first quarter of the calendar year, the group's talks with the BPL group and Hutchison for the strategic selloff fell through owing to differences in the valuation of the circle. However, group officials had maintained that parleys were on with some cellular firms.
The group, which was planning to bid for some fourth cellular licences in partnership with the strategic investor in RPG Cellular, will augment its business in Chennai. It is enhancing the switching capacity from 75,000 to 2 lakh over a period of time.
RPG Cellular is one of the profit-making mobile companies in the country. It currently has a subscriber-base of 78,000 in Chennai. With the switching capacity slated to increase, the company will serve more customers in the metro. Company officials claim that its SMS messages have crossed over one lakh a day.
