Spice Telecom likely to raise $250 mn debt

Spice Telecom, a mobile phone service provider in Karnataka and Punjab circles, is expected to raise close to $250 million (Rs 1,000 crore) from a consortium led by Development Bank of Singapore (DBS) over the next 24 months to fund its expansion plans.

According to senior officials at Spice Telecom, the company is in talks with the DBS-led consortium, which includes Barclays and Deutsche Bank, to raise this fund for its Rs 2,000 crore expansion plan over the next two years.

In fact, DBS had arranged a $215 million debt for Telekom Malaysia, which picked up 49 per cent stake in Spice in early March 2006. The bulk of this is being used to settle debts of Spice Telecom in the recent restructuring exercise announced by the company.

The company officials also did not rule out the option of Telekom Malaysia increasing its stake up to 76 per cent to conform to the regulations in India.

Telekom Malaysia picked up 49 per cent in Spice Telecom for around $180 million. It bought out the 49 per cent stake held by Ashmore Investments and Deutsche Bank in Spice.

Spice Telecom has close to 2 million subscribers. In addition to its licenses in Karnataka and Punjab, it is also bidding for licenses in Jammu & Kashmir, Uttar Pradesh East, Uttar Pradesh West, Haryana, Himachal Pradesh and Rajasthan.

B K Modi, chairman, Spice Telecom said: "The restructuring of the company is complete. We have to look forward and invest in expanding the business. We intend to invest Rs 1,000 crore each in Karnataka and Punjab circles."

He added that business is growing and funding will be done through internal accruals and external funding either through debt or equity. "Taking the company public is another option we are exploring," he added.