Videocon in Talks With Vodafone, Airtel, Idea to Sell Spectrum

Haryana, India, October 13, 2015 (Newswire.com) - Videocon is reportedly looking at a valuation of over Rs 12,000 crore for the spectrum in six circles with sources insisting that the Dhoots have set it as the floor price. Telecom industry sources, however, say the valuation is on the higher side and hinted that a hard line on the issue may not actually result in a deal. When contacted by TOI, V N Dhoot, chairman of Videocon group, declined to comment on the issue.

After the government recently approved spectrum trading guidelines, several telecom companies have been looking at mergers and amalgamations to maximize revenues. Videocon may, however, retain the Punjab operations, given that it is an ebitda-positive circle.

Although it has spectrum in seven circles, the company offers services only in Punjab, Haryana, Madhya Pradesh/Chhattisgarh and Gujarat circles and has around 1.5 crore subscribers.

Sources close to the deal said that it was earlier looking at offloading a stake in the telecom arm but the change in government rules prompted a rethink. Videocon's license was among the 122 permits cancelled by the Supreme Court in the 2G scam, but it won back six circles in the last round of auctions in 2012.

Even as talks are on for a sale, Videocon also wants to simultaneously roll out 4G operations for which it had bagged spectrum during the auctions.

In recent years, Videocon's finances have been under strain due to the large debt on its books, prompting a financial restructuring. It has a consolidated debt of Rs 41,000 crore. But the net debt is Rs 33,000 crore, given the Rs 6,000 crore on its balance sheet as also another Rs 2,000 crore of liquid investments, a group source said.

Besides telecom, the group has also used its oil asset sales to pare debt, including one in Mozambique a few years ago. In fact, industry sources believe that Videocon sold its blocks cheap to ONGC and OIL given the pressure on its finances.