Mumbai, Dec. 26: Spice Communications will sell 875 telecom towers. It has also unveiled plans to borrow over $800 million to fund its expansion plans.
The company today informed the Bombay Stock Exchange that its board of directors had decided to sell the assets to Quipo Telecom Infrastructure, a stand-alone tower operator.
Spice is going to borrow up to $400 million from HSBC and another $410 million from China Development Bank to fund the network expansion in its existing telecom circles.
The BK Modi group company, in which Telekom Malaysia holds a 39.20 per cent stake, is a mobile services provider in Punjab and Karnataka.
The company has a combined subscriber base of around three million in the two states. Although Spice has been in operation for over 10 years now, it is yet to earn a profit after tax. In the quarter ended September 30, it suffered a net loss of Rs 19.79 crore.
However, the company has ambitious expansion plans and has applied for a pan-India GSM licence.
Spice officials said the money would be used to roll out its services in 21 new circles.
The mobile player will have to cough up over Rs 1,500 crore on account of the licence for the 21 circles, said market watchers.
The profit from the sale of the towers will be Rs 500 crore, company chairman B.K. Modi told a television channel.
The company is exiting its non-core businesses and wants to reduce its capital expenditure and improve the balancesheet. It is an attempt to improve operational efficiency before going in for expansion, said Harit Shah, telecom analyst at Angel Broking.
Shares of the company reacted positively to this news and closed higher at Rs 62.90 on the BSE.
Several telecom companies, including Bharti and Vodafone, have sold their tower assets in the past year.