MUMBAI: Odisha based last mile owner (LMO) Ortel Communications, which filed its Red Herring Prospectus (RHP) for a public issue on 21 February, has now announced the price band of Rs 181-Rs 200 per equity share.
As reported first by Indiantelevision.com, the LMO will open the public issue of up to 12 million equity shares of face value of Rs 10 each including a share premium per equity share on 3 March. The issue comprises a fresh issue to the public of up to six million equity shares and an offer for sale up to six million equity shares by New Silk Route (NSR). The bid will close on 5 March.
The minimum bid lot is 75 equity shares and in multiples of 75 equity shares thereafter. The issue constitutes 39.25 per cent of the fully diluted post-issue paid up equity share capital of the company.
In a press conference, held in Mumbai on 24 February, the LMO said that the company and the selling shareholder may, in consultation with the Book Running Lead Manager, allocate up to 60 per cent of the QIB portion to anchor investors at the Anchor Investor Allocation Price, on a discretionary basis, out of which at least one-third will be available for allocation to domestic mutual funds only. Anchor investors can bid on 2 March.
“The issue is being made through the Book Building Process in compliance with the provisions of Regulation 26(2) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, wherein at least 75 per cent of the issue shall be allotted on a proportionate basis to Qualified Institutional Buyers (QIB). In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance equity shares shall be added to the net QIB potion. Such number of equity shares representing five per cent of the net QIB portion shall be available for allocation on a proportionate basis to mutual funds only. The remainder of the net QIB portion shall be available for allocation on a proportionate basis to QIBs,” says the company release.
“However, if the aggregate demand from mutual funds is less than 180,000 equity shares, that is five per cent of the net QIB portion, the balance equity shares available for allocation in the mutual fund portion will be added to the net QIB portion and allocated proportionately to QIBs in proportion to their bids. If 75 per cent of the issue cannot be allocated to QIBs, all the application monies will be refunded forthwith. Further, not more than 15 per cent of the issue shall be available for allocation on a proportionate basis to non-institutional bidders and not more than 10 per cent of the issue shall be available for the allocation to retail individual bidders, subject to valid bids being received from them at or above the issue price,” it further reads.
Ortel Communications, through the IPO, is looking at strengthening its presence in the current four states, including Odisha, Chhattisgarh, West Bengal and Andhra Pradesh as well as expanding to other neighbouring regions. The LMO currently offers services in 48 towns with over 21,600 km of cable supported by 34 analogue and five digital headends.
When asked about the reason for raising capital, Ortel Communications chairman BJ Panda said, “We have already gone for three rounds of private equity funding. Ours is a CAPEX heavy business. As we go forward, it is essential to have public presence. The time has come, when the company has some currency to scale up.”
The revenue generated through the IPO will be used for:
– Deeper penetration: Ortel plans to expand its penetration in not only the existing markets, but also new geographies. “The plan is to grow the number of subscribers,” said Panda.
– Increasing penetration of digital TV: As the nation is moving towards digitisation, Ortel Communications currently has converted 20 per cent of analogue homes to digital homes. The revenue generated will be used at slowly increasing the number of digital homes.
– Increasing Broadband: Currently 11 per cent of Ortel’s total subscribers are broadband consumers. The aim now is to take this up. The LMO currently provides data services at a speed of up to 42.88 mbps through the use of cable modem with DOCSIS 2.0. “We are in the process of upgrading the modems to DOCSIS 3.0. This is currently being tested, and has the capacity of providing broadband at a speed of over 340 mbps,” informed Ortel Communications president and CEO Bibhu Prasad Rath.
– Expand: By buyout of local cable operators and networks. The company so far has entered into agreements with over 490 MSOs/LCOs between April 2009 to December 2014, resulting in an acquisition of 221,155 cable television subscribers.
– Leasing fibre infrastructure to corporates.
As of 31 December, 2014, the company has 372,979 retail subscribers for analogue cable TV services, 95, 295 retail subscribers for our digital cable services and 58,277 broadband subscribers, including 121 corporate customers with provisioned bandwidth of 806 mbps adding up to 526,551 Revenue Generating Units (RGUs).
For the six months period ending 30 September, 2014, the company’s total income was Rs 719.34 million and its PBDIT was Rs 252.39 million. In the same period, carriage and placement revenue contributed 17.11 per cent of the total revenues from operations. The trade receivables were at Rs 216.50 million i.e. 15.05 per cent of total income annualised, which according to the company, was substantially lower than other listed national MSOs.
