The Rs 10 shares of Tata Teleservices that VSNL is seeking to acquire at par have been valued by two leading investment banks at between Rs 11 and Rs 14 a share based only on the Andhra Pradesh circle. The valuation was conducted on the initiatives of the Tatas.
This indicates that once Tata Teleservices rolls out its full operations in four more states in a few months, its valuation will shoot up. The valuation follows the decision of Videsh Sanchar Nigam Ltd (VSNL) to invest up to Rs 1,200 crore in Tata Teleservices Ltd (TTSL) for a 22-26 per cent stake. The valuation by two independent banks is crucial because a VSNL sub-committee set up for this purpose is expected to take a final decision on the issue soon.
Sources close to Tata Teleservices said the valuation would be higher once the company rolls out its complete services by the third quarter of the calendar year. The cost of the entire project is expected to be around Rs 8,250 crore till 2008.
The banks arrived at the valuation of Rs 11- Rs 14 after taking a host of parameters into consideration. These include firm value by revenue, by EBITDA and by subscribers. Apart from employing these parameters, Tata Teleservices was compared with a basket of comparable telecom companies in the Asia-Pacific region. The companies which were taken up for this purpose were in fixed line, wireless and full services.
Tata Teleservices expects to launch services in Karnataka, Gujarat, Maharashtra and Tamil Nadu soon. Once the services are launched in these states, the company is expected to have a base of around 28 lakh subscribers by 2006 and around 72 lakh by 2010. Currently, the subscriber base in Andhra Pradesh alone is around 1.5 lakh.
VSNL has been scouting for a partner to get into basic services for quite sometime. It first sought the government
