Spice may add six more circles

NEW DELHI, INDIA: Spice Communications is likely to add six more telecom circles in the next couple of months.

Highly placed officials on condition of anonymity confirmed that the company had received the Letter of Intent (LoI) during May 2007 from the Department of Telecom (DoT). The company, on August 31, 2006, had applied for operating licenses to operate in 21 additional cellular circles in the country including Delhi, Mumbai, Kolkata and Chennai.

Preeti Malhotra, director and company secretary, Spice Communications denied commenting on the development, when asked about the LoI.

Speaking on the spectrum allocation Umang Das, MD, Spice said that the company has already applied for allocation of spectrum. “Presently we have an allocation of 7.8 MHz spectrum in 900 MHz frequency band. We have applied for additional spectrum of 2 MHz based our subscriber base,” Das said. However, if the operator is granted with 2 MHz spectrum it is likely to be in the 1800 MHz.

According to the Red Herring Prospectus of Spice Communications IPO, “Any additional spectrum granted to us will be in the 1800 MHz band, since there is no availability in the 900 MHz band. The 1800 MHz band generally requires more capital expenditure than the 900 MHz band.”

The operator has also applied for 3G spectrum allocation and the application is pending with DoT. The officials said that current regulations provide for the provision of additional need-based spectrum on payment of additional fees, but there can be no assurance that the DoT will grant Spice additional spectrum or that it will do so in a timely or cost-effective manner. “Our network expansion plans in Punjab and Karnataka may be materially affected if we are unable to obtain additional spectrum,” the official said.

The company is also awaiting couple of operational approvals, including the approval from the Standing Advisory Committee on Radio Frequency Allocation (“SACFA”), to set up additional cell sites. Spice is currently operating in two circles in India - Punjab and Karnataka with 3 million subscriber base.

The company enters the capital market on June 25 with a Public Issue of 113, 111, 111, equity shares of Rs. 10/- each through a hundred per cent book building process. The price band has been fixed between Rs 41-46 per equity share.

The IPO will be part of the equity dilution by the promoters – MCorp Global to the tune of eight per cent and the foreign partner’s – Telecom Malaysia; dilution of another eight per cent. Spice has already placed 25 million shares with two FII’s – Lehman Brothers and the Spinnaker group, and raised about Rs 125 crore.