India’s Spice telecom conglomerate will consolidate its telecoms businesses into new listed entity Spice Mobility.
The company said it will merge listed arm Spice Mobiles – its mobile handset vendor business - with unlisted telecoms holding firm Spice Televentures.
The new entity Spice Mobility intends to invest 10 billion rupee ($217.7 million) over the next two years, said a report in the Economic Times.
Under the deal, which has been approved by Spice Mobiles board, Spice Televentures’ shareholders will receive 7.91 shares in Spice Mobiles for each share they own.
"The merger will create greater financial depth and ability to raise capital as it will combine all our businesses in the telecom space under one single company," B.K. Modi, chairman of the Modi group, told ET.
"The merger will consolidate the group's strengths in various non-service providing telecom businesses that include mobile handsets, retail and value-added services.”
The group is also considering raising funds for expansion through a qualified institutional placement, which Modi says could include a strategic investor being taken on.
Part of the group’s expansion plans includes increasing Spice Retail’s number of handset retail outlets from 500 to 6,000 over three years.
In July 2008, BK Modi agreed to sell his controlling 40.8% interest in tiny Indian cellco Spice Communications to Idea Cellular for over $630 million.
The equity capital of Spice Mobiles will increase to 19 billion rupee after the deal is finalized.