Datacom Mobile - A Videocon Enterprise

[@ksh@T 20]

guys all the latest development on datacom mobile here

Middle East players eye Datacom

MUMBAI: A string of Middle East telecom companies are interested to take a majority control in Datacom, the Videocon Industries-promoted cellular firm with a pan-India licence to start operations in 22 circles.

The list includes Qatar Tele (Qtel), Etisalat, Bahrain Telecommunications Company and Zain. Datacom has hired the investment bank Morgan Stanley to select a partner and the deal is expected to be closed in two months.

When contacted, Videocon Industries’ CMD Venugopal N Dhoot confirmed the development. He said the idea of inducting an experienced partner goes well with Datacom’s plan to grab a substantial chunk of the Indian telecom market—the world’s second-fastest growing market—in three years.

“A partner with the expertise in this business coupled with our marketing strength would be a formidable combine,” he said. Videocon is a leader in the consumer durable business. It also has a chain of 900 retail showrooms called NEXT which sells mobile phones and other electronic goods.

Industry sources said the cash-rich foreign telcos are “very serious” to enter India by acquiring interest in domestic companies which have started receiving spectrum. Unitech and BPL Mobile’s subsidiary Loop Telecom are among the companies awaiting get equity induction from foreign telcos.

A surge in oil price has placed these players in an advantageous position vis-a-vis their counterparts in Europe and the US, which are suffering from a credit turmoil. Mr Dhoot said a team of 500 professionals are working overtime to roll out Datacom’s launch of telecom services in Chennai and south India in the next two months.

Datacom has announced an investment of Rs 6,000 crore to set up a pan-India network by end 2008. Experts said it will generate the required money for the expansion of network by selling the majority stake. It is estimated that setting up a pan-India network would require over Rs 20,000 crore.

The India entry fits well into the Middle East telcos’ ambitious global plans. For example, Zain aims to be one of the top 10 mobile groups in the world by 2011 while Qtel wants to rank among the top 20 by 2020. Zain was established in 1983 in Kuwait as the region’s first mobile operator. Since 2003, it has become the fourth-largest telco in the world in terms of geographic presence with a footprint in 22 countries.

[@ksh@T 20]

Raja allocates spectrum to new telcos in Orissa

NEW DELHI: Government on Thursday allocated start- up spectrum to new telecom players in Orissa, a move that would further increase the competition in the sector.

Earlier the Department of Telecom had distributed the radio waves in Tamil Nadu.

Five new players -- Videocon-promoted Datacom, Idea Cellular, realty major Unitech, Swan Telecom and Loop Telecom -- have been given start-up GSM spectrum of 4.4 MHz in the Orissa circle, official sources said.

Sources said that Communication and IT Minister A Raja today signed the file giving green signal to allocate GSM radio frequency to new players.

The DoT is also looking at other circles where spectrum is available in abundance and can be allocated to all the aspirants simultaneously.

Some of the players, especially Idea Cellular and Spice Communications, had questioned Raja's first-come-first-serve policy to allocate spectrum, saying this should be done on the basis of application and not the payment of required fees.

Besides Tamil Nadu and Orissa, according to sources, spectrum for all is available in circles of Andhra Pradesh, Karnataka, Kerala, Bihar, Madhya Pradesh and Kolkata and the minister may distribute it soon.

[@ksh@T 20]

the government has also cancelled the LOI of Datacom Solutions as it has not submitted compliance of LOI for Punjab Service Area, sad it is a very milking circle which has one of the largest subscribers with the most competetive tarifs

[kesav 127]

@ksh@T,

post#2 and post#3 are quite old information and already covered in the thread "The Spectrum Tussle - Cdma V Gsm".

Kindly take action accordingly.

Edited April 25, 2008 by kesav

[@ksh@T 20]

Datacom-HFCL legal battle may spoil party before it starts

NEW DELHI: Videocon-promoted telecom venture Datacoms roll-out plans envisaging an investment of up to Rs 15,000 crore may get upset with its minority shareholder HFCL preparing to fight a legal battle for alleged violation of shareholders agreement between the two.

HFCL-backed Jumbo Techno Services, which sold majority shareholding of 64 per cent in Datacom Solutions to Videocon's Dhoots, is understood to have raised serious issues relating to corporate governance and has said that major decisions have been taken by the company without consulting the minority partner.

When contacted HFCL promoter Mahendr Nahata declined to give details of the fight but said, "We are going to fight for our legal rights."

Fearing legal action by Nahata, Videocon has filed a caveat in Delhi High Court against any judicial order prior to hearing. The company was recently given pan-India licence for offering telecom services and has also received spectrum (radio frequency) in some of the circles.

Datacom, which is also scouting for a foreign partner, may require about Rs 15,000 crore to roll out network at all- India level. With a legal battle looming in the backdrop, finances from both Indian banks and institutions as well as foreign equity may become difficult, sources said.

The new players are already under huge pressure as most of the market has been captured by the existing cellular operators and any legal battle on top of it may affect the valuation of Datacom adversely, they said.

[Honest 836]

Dhoot offers peace deal to Nahata

25 Jul, 2008, 0240 hrs IST, ET Bureau

MUMBAI: Mahendra Nahata and the Dhoots, warring partners in Videcon’s telecom arm Datacom Solutions, are engaged in talks intended to save the venture that is set to begin network rollout next month. Sources told ET that Videocon group chairman Venugopal Dhoot met Mr Nahata and assured him that key decisions in Datacom, including deciding on a joint venture partner, will be implemented only after a go-ahead from him. They also discussed a host of issues, including the shareholders’ agreement.

The Dhoots are learnt to have proposed talks amid concerns that a legal battle could upset Videocon’s attempts to raise resources by selling a stake to a foreign entity and delay the start of its network rollout, slated for August 15 in Chennai. When contacted, Mr Dhoot told ET, “We are trying to resolve the misunderstandings between us and go ahead with the planned roll-out of our services. We are also standing by our commitment to invest Rs 1,000 crore in the business.”

However, Mr Nahata said as yet, only certain proposals had come up for discussion. “Nothing has been finalised as yet,” he told ET. Sources said Mr Nahata has adopted a tough stand to ensure that his rights in the company are respected by Videocon and he may insist on inserting additional clauses into a re-wired agreement. Jumbo Techno Services, owned by the Nahata family, has a 36 per cent stake in Datacom while the rest is with Dhoots. “Management issues between the two nominated representatives of both parties had snow-balled into a misunderstanding between the two promoters,” a source said.

Mr Nahata and his representatives in Datacom had claimed that they were being kept in the dark about key company decisions and had even contemplated taking the Dhoots to the courts over the issue. Pre-empting a legal move by Mr Nahata, Videocon had also filed caveats in major High Courts against any judicial order before a hearing on the issue. Videocon is currently in talks with a couple of global telecommunications majors, including Dubai-based Etisalat, Kuwait’s Zain and France Telecom, besides others for offloading stake in the company. The new entrant in the crowded telecom space has also invited bids for telecom equipment worth $5-$7 billion crore for installing 70 million lines.

The Dhoots are in a hurry to roll out their telecom venture as early as possible to grab subscribers in the market adding over 8 million subscribers every month. The Dhoot brothers have been wanting a foothold in the world’s fastest-growing telecom market and applied for spectrum in September last year. However, their application reached the department of telecom after the due date for new licences. So they bought 64% in Nahata’s company, Jumbo, through Videocon. All was well between the partners until Jumbo promoters claimed that decisions were taken at Datacom without consulting them and “against the interests of the company”.

[Honest 836]

Dhoot's adamant approach hindering solution: Nahata

11 Aug, 2008, 1720 hrs IST, PTI

NEW DELHI: Even before its take off, telecom joint venture Datacom is heading for a courtroom battle, with HFCL's Mahendra Nahata alleging that his alliance partner V N Dhoot of Videocon is reneging on commitment and has threatened to take legal recourse.

Nahata, whose firm was given the telecom licence before he decided to sell majority stake to Videocon, hit out at Dhoot saying that the joint venture was being run as a proprietorial firm without he getting the due weightage as a partner.

"In the first place, we are shocked at the manner in which the original commitments are not being met and he (Dhoot) is trying to run the company as a sole proprietorship firm without any regard to principles of corporate governance," Nahata said.

While Dhoot could not be contacted for his comments, Datacom CEO Ravi Sharma declined to comment, saying: "This was an issue between two shareholders."

According to sources, Nahata has asked for about Rs 2,100 crore to sell his 36 per cent stake in Datacom and Rs 450-500 crore compensation for not merging HFCL Infotel's telecom operations in Punjab with Datacom as per original agreement.

Both parties held talks to reach at an amicable solution but failed, with sources saying that Nahata has rejected the proposal in which Videocon is understood to have offered 324 million dollar and that too over a period of 18 months.

Datacom has a pan-India license to offer mobile services and the company was originally promoted by Mahendra Nahata who had sold 64 per cent stake to Videocon promoters due to financial constraints and on a condition that Nahata would get 36 per cent equity free.

[Honest 836]

Dhoot-Nahata battle over Datacom hots up

15 Aug, 2008, 0032 hrs IST, ET

NEW DELHI: The bitter corporate battle between the Dhoots of the Videocon group and Mahendra Nahata of Himachal Futuristic Communications (HFCL) over telecom service provider Datacom has spilt over to lenders, regulators and potential foreign investors. HFCL chairman Mr Nahata, who owns 36 per cent in Datacom, has sent a communication to State Bank of India and Datacom’s auditors alleging that the Videocon group has passed off a Rs 1,000-crore loan from the bank as its own contribution to Datacom’s equity, which is a violation of banking and company law norms. Mr Nahata has alleged that he possesses documentary proof of several other financial irregularities in Datacom by the Videocon group.

Mr Nahata has also dismissed Mr Dhoot’s offer to buy out his stake in Datacom for Rs 1,360 crore. Instead, he sent a counter-proposal that he would be willing to buy out the Dhoots, but with several riders: First, he will not buy the stake at a premium, but only at the original consideration. Next, the Videocon group will have to take back the money it has put into Datacom so far. At the same time, Mr Nahata has maintained that he is open to exiting Datacom if the Dhoots pay him Rs 2,116 crore for his entire stake in the company. Last year, the Videocon group had bought a 64 per cent in Datacom from Mr Nahata.

Datacom was among the nine new players who were given telecom licences early this year. Industry sources say the stand-off between the two promoters could delay telco’s plans to become the first player among the new entrants to launch mobile services.

The Videocon group has hit back and termed Mr Nahata’s allegations as baseless. “The balance sheet of Datacom will be ready by August 31, and it will clearly indicate that the Rs 1,000 crore is shown as a loan. We also know that Mr Nahata and a minority shareholder of Datacom by the name of Manjit Singh have sent a communication to SBI and the auditors. They are only trying to malign the names of Datacom and its management with such misleading allegations,” Videocon group chairman Venugopal N Dhoot told ET.

According to Mr Dhoot, Datacom had been forced to prepare provisional financial statements as Mr Nahata wanted these in a short time. But these, he said, were not final, adding that Mr Nahata had circulated these documents at various forums. “They are showing these statements not as provisional but audited statements in their bid to pressure us to agree to their illegal demands. Datacom shall respond to all such communications in an appropriate manner and also take necessary action to safeguard its interest,” he added.

When asked about a possible settlement, Mr Nahata said that no solution was possible as Videocon had failed to adhere to the investment agreement for Datacom. “I feel both deceived and hurt that an industrialist of Mr Dhoot’s stature could so brazenly go back on his commitment,” Mr Nahata said. He is of the view that against a promise of bringing equity capital of $901 million into Datacom as part of their 64 per cent, the Dhoots were trying to bring their investment commitment in the form of a loan and later recover the money by selling their stake to foreign players. “In effect, they are trying to get 64 per cent equity for free,” Mr Nahata added.

Mr Dhoot on the other hand said that Videocon had kept to its side of the bargain. “On the contrary, the deadlock is created by Mr Nahata by insisting that we should invest $901 million in equity of Datacom and that too by way of preference shares at a premium of Rs 1,490 per share and because of this attitude and Mr Nahata’s approach, the shareholders agreement could not be completed. I categorically say that in the entire investment agreement, there is no mention that $901 million shall be by way of investment in equity. It is grossly incorrect that we have failed to adhere to the investment agreement,” he added.