HFCL Infotel will soon be merged with Datacom, the new company promoted by HFCL promoter Mahendra Nahata. Later Nahata introduced Videocon group as majority partner in the company.
The two companies are currently working on finalising merger of HFCL Infotel with Videocon. HFCL Infotel is a listed company and its share has been falling ever since the news appeared that the company has failed to get pan-India licence for GSM services. Its share closed at Rs 44.30 on Monday, a 5 per cent down from the earlier close of Rs 46.60.
It is not yet clear what will be the exact valuation of HFCL Infotel.
Datacom is top in the priority list of getting a licence for GSM services. On Monday, the union communications minister A Raja re-confirmed DoT’s decision to implement the first-come-first serve policy, ie, the company which was first to submit the licence fee will be considered first for allocation of spectrum.
Swan was the first in the que and Datacom followed it. However, Swan submitted licence fee for only two circles. Datacom became the first company to offer licence fee for all the 22 circles.
HFCL Infotel operates services in Punjab. It launched its services in October 2000 and has been able to give tough fight to the telecom biggies like Reliance and Airtel. As per TRAI, HFCL had a subscriber base of over 2.56 lakh CDMA-based wireless subscribers and 1.56 lakh wireline subscribers as of November, 2007.
If the company is merged with Datacom, it will be able to compete with other big players on equal terms.
Earlier, the DoT had rejected HFCL Infotel’s application for unified access service licence (UASL) on the grounds that it does not meet networth criteria.
Under the UASL regime, every circle requires a specific net worth to be held by the applicant or parent company. The net worth is cumulatively calculated as pre-qualifying criteria before issuing LoIs, which leads to license fee payments and finally, the grant of a UAS licence. For pan-India licence a company should have a networth of Rs 1,350 crore.
IDBI owns more than 10% stake in HFCL Infotel. DoT argued that IDBI’s networth cannot be considered while calculating HFCL’s networth as IDBI is a bank.