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Telecom IPOs Blossom in Asia/Pac

Light Reading
News Analysis
Light Reading
11/30/2006
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Telecom companies in the high-growth Asia/Pacific region are closing out the year with a rash of IPOs to finance their expansion.

  • Indonesian operator PT Mobile-8 Telecom made its debut on the Jakarta Stock Exchange yesterday, listing 19.9 percent of its equity at a price of 225 Rupiah ($0.025) per share.

    The offering was oversubscribed 7 times and the stock closed the day up Rp55 at Rp280 ($0.03).

    The carrier raised around Rp877.5 billion ($95.47 million) from the initial share offering, and says it will invest more than $54 million in expanding its CDMA network nationwide, while the remaining amount will be used for "working capital and other general corporate purposes." (See Mobile-8 Touts IPO.)

    Mobile-8 has doubled its customer base to 1.6 million over the past year and plans to reach around 4 million by the end of 2007. The company expects its net income to quadruple next year from Rp50 billion ($5.44 million) to more than Rp200 billion ($21.76 million).

  • The demand for telecom shares in Asia has prompted China Communications Services to raise the price of its upcoming IPO in Hong Kong on December 8, which has been oversubscribed 18 times.

    The company previously planned to sell 1.29 billion shares at a range of HK$1.56 to HK$1.96, but it's now asking for between HK$1.70 ($0.22) and HK$2.20 ($0.28) per share for total proceeds of HK$2.84 billion ($365.24 million).

    CCS, the engineering and technical services unit of China Telecom Corp. Ltd. (NYSE: CHA), counts all five of China’s state-owned carriers as its customers. China Telecom, China Mobile Communications Corp. , and China Unicom Ltd. (NYSE: CHU) account for 62.7 percent of the company’s total revenue.

    Cisco Systems Inc. (Nasdaq: CSCO) will invest $50 million in the IPO for a 4.2 percent strategic stake in the company, while IDG will take a 0.84 percent stake for $10 million.

    China’s long-awaited 3G network rollout will be a major driver of CCS’s revenues, which Goldman Sachs & Co. expects to begin in the second half of 2007. Goldman notes in a research report that CCS intends to acquire assets from China Telecom in the 15 Chinese provinces where it doesn't already operate over the next 12 to 18 months. The move will double the size of the company, which expects revenues to climb by 61 percent to 724 million Chinese Yuan Renminbi ($92.27 million) this year from RMB449 million ($57.22 million) in 2005.

  • According to a statement from the Vietnamese Ministry of Finance, the Finance Promotion Technology Corp. (FPT) has received approval to list 60.8 million shares on the Ho Chi Minh City Securities Trading Center by the end of the year. It has set a price of 10,000 Vietnamese Dong ($0.61) per share to raise $37.8 million.

    FPT offers systems integration, mobile distribution, software services, telecom, and e-media content services. In October, private equity group TPG Inc. and Intel Capital , bought a 10 percent stake in the company for $36.5 million.

  • Over in India, three telecom related companies are finalizing plans for public offerings. XL Telecom Ltd. , which has diverse operations in mobile phone assembly and energy, plans to list 39.6 million shares at a range of between 125 Rupees ($2.80) and 150 Rupees ($3.35). The company will issue shares between December 4 and December 7.

    XL Telecom intends to spend Rs200 million ($4.47 million) of the Rs600 million ($13.42 million) proceeds on expanding its facilities for the production of motherboards for mobile and fixed wireless phones. It partners with Kyocera Corp. (NYSE: KYO) for CDMA mobile handsets and with Axesstel Inc. (OTC: AXES) for CDMA fixed wireless devices.

    Telecom manufacturing accounted for around Rs3 billion ($67.12 million) of the company’s Rs4 billion ($89.5 million) revenues for the 2006 financial year.

    Tanla Solutions Ltd. , which provides messaging software and OSS products to mobile carriers, plans to issue 15.89 million shares between December 11 and 14, at a range of Rs230 ($5.15) to Rs265 ($5.93) per share. It will list on both the Bombay and National stock exchanges. Tanla hopes to raise around Rs4.21 billion to finance expansion including a new development center in Hyderabad and a backup and recovery center in Bangalore.

    Tanla counts all 6 of the U.K.’s major mobile operators among its partners, and plans to invest Rs40.6 million ($908,000) in overseas expansion, including a new marketing office.

    Among India’s largest business process outsourcing providers, ICICI OneSource Ltd. has announced it’s rebranding as FirstSource Solutions Ltd. and planning to offer 95.6 million shares, a 23 percent stake, on the BSE and NSE. It's yet to determine the share price. The company plans to use Rs1.8 billon ($40.27 million) of the proceeds to fund acquisitions and $10 million for debt repayment.

    The company is listed in the Light Reading report, Who Does What: Outsourcing to India, which categorizes the growing number of outsourcing companies that serve the telecom industry.

    Indian mobile carriers like Idea Cellular Ltd. and Spice Telecom have announced their intentions to go public in early 2007, but not all the proposed listings are going to plan: Hutchison Essar has recently dropped its IPO over a management dispute. (See Hutch Essar Expands, Scraps IPO.)

    — Nicole Willing, Reporter, Light Reading

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