The Indian telecom industry is currently buzzing with initial public offer (IPO) plans. During the last one year, about a dozen telecom companies have expressed their intentions to hold IPOs aimed at raising funds for expansion.
But, as per analysts, the present telecom environment is not suited for raising funds from the public. According to Jagannadham Thunuguntla, equity head, SMS Capitals, “Telecom environment is quite dicey at present and the telecom firms which are going for an IPO will not attract too many investors.”
He said that between 2000 and 2010, the telecom industry in India had witnessed enormous growth, but that it has now reached a point where margins have started declining.
Thunuguntla added, “Most telecom companies looking at an IPO have been functional from the last four to five years and have now reached a saturation point of investment. Their funds have started depleting and it’s high time that they should look at raising money from other sources.”
“Companies such as One97, which have been doing very good financially and have been funded by private equity (PE) firms till now, are now aiming for an IPO as their PE partners have decided to make an exit after four to five years.”
Telecom Yatra takes a look at the steps these companies are taking towards achieving this goal.
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