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Ortel files with SEBI for IPO, to use Rs 103.8 cr for video, digital cable and broadband

MUMBAI: Ortel Communications, Odisha’s leading multi-system operator (MSO), will use Rs 73.6 crore (Rs 736 million) out of the IPO proceeds for expansion of network for providing video, data and telephony services.

Ortel, which once again filed a draft red herring prospectus (DRHP) with the market regulator Securities and Exchange Board of India (SEBI) for its proposed initial public offering (IPO), will utilise Rs 19.9 crore (Rs 199 million) for digital cable services and Rs 10.3 crore (Rs 103 million) for broadband services. The remaining amount will be used towards general corporate purposes and issue expenses.

The total utilisation, thus, amounts to Rs 103.8 crore (Rs 1.04 billion).

TelevisionPost.com was the first to report in August that the MSO was reviving the IPO plan and that private equity investor New Silk Route (NSR) was seeking to unload its entire stake in Ortel.

According to the draft filed today with SEBI, Ortel’s public issue will be of up to 14,182,598 (14.18 million) equity shares of the company, which include fresh issue of 60 lakh (6 million) shares and offer for sale of 81.82 lakh (8.18 million) shares by NSR.

This is the third time Ortel has filed for an IPO. It first filed the documents four years back. However, as the market conditions were not favourable, it decided not to continue. Later, in 2013, it once again filed and withdrew the plan.

In the previous filing, NSR was looking at a partial exit; however, the private equity firm intends to now sell its entire 33.58 per cent stake in the company.

It is expected that the issue size will be around Rs 300 crore (Rs 3 billion), over three times the initial plan of Rs 100 crore (Rs 1 billion). The total equity dilution will be 46.38 per cent, while the promoter holding will drop from 64 per cent at present to around 51 per cent post IPO.

The MSO is expected to go for a pre-IPO placement of up to 25 lakh (2.5 million) shares to raise up to Rs 65 crore (Rs 650 million).

Kotak Mahindra Capital Company Ltd is the book running lead managers to the issue.

Promoted by Biju Janta Dal (BJD) MP Jay Panda and his family, Ortel is the dominant MSO in Odisha. It also has operations in Chhattisgarh, Andhra Pradesh and West Bengal.

It provides analogue and digital cable and broadband services under Ortel Home Cable, Ortel Digital and Ortel Broadband brands respectively. It offers services in 48 towns and adjacent semi-urban and rural areas with over 21,600 kilometres of cables supported by 34 analogue head-ends and five digital head-ends.

As of 30 June, 2014, it had 388,115 retail subscribers for its analogue cable television services, 74,213 retail subscribers for digital cable television services and 55,861 broadband retail subscribers.

For the fiscal ended 31 March, 2014, Ortel posted a total income of Rs 132.16 crore (Rs 1.33 billion), while its net loss stood at Rs 12.5 crore (Rs 125 million). Out of its total revenue, 58.89 per cent came from cable television subscription fees and 15.92 per cent from channel carriage fees, as per its filing with the SEBI.

Ortel is the third media company to file for an IPO this year after Shemaroo Entertainment and Adlabs Entertainment.

Also read:

Ortel revives IPO plan, New Silk Route to exit