Spice Telecom plans $150 mn IPO

BANGALORE: Karnataka’s first mobile telephony service provider Spice Telecom (Spice) has plans for a public issue totaling $150 million.

Modicorp (51% stake) along with Telekom Malaysia (49% stake) own Spice. The red herring prospectus will be filed with Sebi and the IPO is likely to open in end March this year with Spice to planning to dilute around 15-20% of their stake.

Spice has recently been awarded a railway outsourcing contract by IRCTC to provide services to the customers for a payment of Rs 1 billion over 10 years. The scope of work includes providing customers with information services across India, IVR, information and other services. The voice call to IVR ratio is around 20:80 according to Spice officials. The contract commences from March this year.

Spice is present in 2 circles – Karnataka and Punjab with a customer base of around 2.5million of the total 100 million plus Indian subscribers. India has over 6000 railway stations and almost 80-90% of these are covered by mobile service providers. Spice is in negotiations with other service providers for carriage and other services in the other circles. This contract means that over the next ten years other service providers can provide railway information only through Spice.

To ramp up and meet the service requirements, Spice plans to set up 4 regional hubs all over the country. This contract has been obtained by an equally shared joint venture between Spice and Spanco Telesystems (Spanco) from Mumbai. Spanco are to be the hardware system integrators for this venture.

Speaking during a press briefing in Bangalore yesterday, Modicorp chairman BK Modi said, “Railways cover the length and breadth of the country physically, Spice will help connect the country telephonically,” while announcing that Spice planned to have kiosks on every platform in the country, where valid passengers can pick up sub $20/- mobile and with a Rs 50/- chip that can receive incoming calls free.

“Currently we were lacking in distribution. Now with 6,000 railway stations we can take telephony to the bottom of the pyramid, a mobile is no longer a luxury, it is a necessity, and with 4 billion passengers that travel by train, the aim for reaching a subscriber base of 500 million by 2010 could be met even earlier,” Modi said.

Spice along with Taiwanese suppliers provide low end as well as high end mobile phone instruments.

Unconfirmed reports also indicate that Bollywood diva Katrina Kaif has been appointed brand ambassador for Spice. Priyanka Chopra, whose three year contract ends in December 2007, will also continue as brand ambassador, a company source says.


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