Videocon plotting demerger to simplify mobile exit in four circles

14 Oct 2015

Videocon Group is planning to demerge its telecom business into six new group companies as part of preparations to exit the wireless market in four circles, the Economic Times writes, citing three unnamed people aware of the matter. The proposal would see Videocon Telecom split up its operations into six distinct units, one for each circle in which it holds spectrum – namely Uttar Pradesh East (UPE), Uttar Pradesh West (UPW), Bihar, Gujarat, Haryana and Madhya Pradesh (Videocon also operates in Punjab through wholly owned subsidiary Quadrant Televentures) – as the company’s backers believe that ‘circle-by-circle merger and acquisition deals might be a more pragmatic option for exiting key markets such as UPE, UPW, Bihar and Gujarat, for which there are several takers.’

The loss-making cellco has been looking to sell or trade its spectrum in an effort to modernise its operations in some areas and to minimise expenses, but confusion over the rules of such a deal and disagreements over valuations have reportedly prevented the company from closing any agreements. According to TeleGeography’s GlobalComms Database, Videocon is one of the smallest operators in the country by subscribers, claiming a market share of just 0.8% at end-June 2015, with that figure rising to 1.1% if Quadrant’s subscribers are also factored in.

India, Videocon Telecommunications Limited (VTL)