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Data Access aims for $1 b in IPO

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CIOL Bureau
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MUMBAI: Data Access (India) Ltd, a provider of international phone services in India, plans to raise up to one billion rupees in the country's first telecom IPO this year.



The sale is part of a boom in share offerings expected to raise a record $5 billion this year. Share sales in several state-owned energy firms and a IPOs from few privately-held companies' have raised over $3 billion in recent weeks.



The issue from Data Access, a joint venture between India's SPA Enterprises Ltd, and Hong Kong's dominant fixed-line company, PCCW Ltd, closes on April 5.



"The whole telecom domain works through mergers and acquisitions and unless you have traded stock, you are at a handicap," Data Access (India) Managing Director, Siddharth Ray said.



On offer are 50 million shares, which will be sold at 17 to 20 rupees a share, the New Delhi-based company said. The IPO opens on March 29.



Nearly half, or 450 million rupees, will be used to repay debt, while 200 million rupees will go toward working capital and the rest will be spent on expanding and upgrading its international telephony network, the company said.



The issue will constitute 25 percent of the company's paid-up capital. PCCW's stake will fall to 17 percent after the issue from 24 percent, while India's SPA Enterprises will drop to 57 percent from 74 percent.



SSKI Corporate Finance Pvt Ltd and Enam Financial Consultants Pvt Ltd are the lead managers of the issue.



Data Access, which started offering services in India in July 2002, posted a revenue of 6.22 billion rupees in its fiscal year to September 30, 2003 and an operating profit of 550 million rupees.



The company is one of four providers of international phone services in India, including Bombay-based Videsh Sanchar Nigam Ltd, which was the state-run monopoly until the sector was thrown open to private players in April 2002.



Videsh Sanchar now belongs to the Tata group, India's second largest conglomerate, following its privatization in early 2002.



The other two companies are New Delhi-based Bharti Tele-Ventures, 16 percent owned by Singapore Telecommunications, and Bombay-based Reliance Infocomm, 45 percent owned by Reliance Industries.



State-run Bharat Sanchar Nigam Ltd, the largest domestic phone service provider, also holds a license for international services but has yet to start offering them.



Unlike the other three service providers, Data Access is a carrier's carrier, active only in the wholesale market. Ray said it does business of 2 billion minutes per year worldwide, out of which 75 percent is from India.



Data Access recently sparked a price war in the sector by offering to connect calls from Bharat Sanchar's network to key Western nations at a huge discount to the existing price.



Indian companies earn about a billion rupees a year in revenue from incoming and outgoing international calls.



© Reuters

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