XL Tele to buy back Corning's 30% stake

Plans Rs 30cr IPO; appoints Grant Thornton India to streamline operations

Hyderabad-based XL Telecom, a Rs 250-crore telecom equipment and CDMA handset manufacturing company, is slated to buy back the 30 per cent stake held by US-based multinational Corning Inc in the company. This apart, the company is considering an initial public offering in the next 10 months.

XL Telecom managing director Dinesh Kumar told Business Standard that XL would buy the 30 per cent stake held by Corning in the company in the next six months. "Their stake is a historical stake and came Corning's way because of their acquisition of RXS, a division of Siemens AG that had earlier invested in the company in 1985."

XL, according to Kumar, would be paying Corning a couple of crores for its 30 per cent stake in the company. "The deal has been struck with Corning at the rate of about Rs 25 per share," Kumar said. Apart from Corning, three financial institutions IDBI, ICICI and IFCI together hold another 30 per cent in the company.

XL was also readying for an initial public offering (IPO) in the next 10 months to a year. The IPO is expected to give the company currency to look at some acquisitions in the telecom software area, apart from setting up marketing and servicing operations in the Middle East and Africa.

"We are not looking at a huge issue. We would ideally raise around Rs 30 crore and have appointed Grant Thornton India to help us streamline our operations. We want to make some acquisitions in the user interface software area for CDMA handsets and the IPO should help us in that endeavour," Kumar said.

XL, which makes CDMA handsets for Japanese multinational Kyocera at its manufacturing unit in the outskirts of Hyderabad, is also going to start the manufacturing of fixed wireless terminals in collaboration with US-based AccessTel Inc, according to Kumar.

The deal that was signed a month ago is expected to give a leg-up to the company's revenues, as AccessTel is understood to have a major share of the telecom business from the Tatas.

"This deal with AccessTel should help us gain considerable market share as it helps us to bid for the BSNL tender for the supply of about a million fixed wireless terminals. The fact that the Rs 700-crore BSNL tender is to be coupled with the supply of SMPS units will give us a good chance," he said.

XL is also one of the few companies in India that makes SMPS or switch mode power supply units, which are used by telecom companies to regulate power supply.

The BSNL tender is expected to allocate 50 per cent of the tender quantity to the L1 bidder, with the L2 and L3 bidders sharing 30 per cent and 20 per cent respectively.