Rothschild To Place $26.2m Dss Mobile Comm Equity

DSS Mobile Communications Ltd (DSS), radio paging services provider, has appointed Rothschild Inc for private placement of approximately $26.2 million in the international market.

The offered shares will represent around 15.75 per cent of the company's outstanding equity. The global placement is a part of a major equity restructuring exercise by the paging company which is based on $140 million pre-offering valuation.

The equity recast is aimed at moving westwards to rope in partners, especially from the US, following the Korean majors' decision to dilute their stake in the wake of the south-east Asian debacle.

In a recent presentation by all the paging companies before the Telecom Regulatory Authority of India, DSS' accumulated losses was shown at a whopping Rs 200 crore. DSS, which provides paging services under the brand name Mobilink, is a joint venture between the Dalmias and SK Telecom of the $26 billion Sunkyong Group of Korea and Samsung Electronics. Both the Korean companies currently hold 29.5 per cent and 19.5 per cent stake, respectively, in DSS.

 

At present, the Dalmia group directly holds 10 per cent stake, while 41 per cent is held through SDT, a holding company in which Dalmia group companies have a majority holding. The authorised share capital of the company is Rs 50 crore, divided into 50 million shares of Rs 10 each.

According to the restructuring plan, SKT and companies in the Dalmia Group will transfer a portion of their shares to the holding company(SDT) concurrently with the private placement.

The pro forma equity structure, after the private placement becomes effective, will see the Dalmias divesting their entire 10 per cent stake held directly in favour of SDT, the holding company. As a result, SDT will have 51 per cent stake.

SK Telecom will dilute its stake from 29.5 per cent to 16.8 per cent while Samsung Electric Co's stake will come down to 16.4 per cent from the current 19.5 per cent. New investors will pick up stakes to the tune of 15.8 per cent.

Mobilink currently operates in 10 cities and had a 32 per cent market share with a subscriber base of 160,000 by August end, 1997.

when the total number of pager subscribers in the country was 500,000. The company claims that this market share has increased to 40 per cent till the end of 1997.

Against the last three month's average growth rate of 7 per cent in the industry, the subscriber base of the company has grown by 17 per cent, but increase in operational costs have also kept pace.