DLF: on a Selling spree
Sale of non-core assets to bring it debt relief
DLF, the country’s leading property developer, is expecting to close the deal on its luxury hotel chain Aman Resorts by the end of December. The Aman Resorts assets for sale include 22 hotels in 12 countries, but not the property in New Delhi. The move to sell the property has been prompted by property developer’s attempts to sell off its non-core assets so as to reduce its whopping Rs.232 billion worth of debt. The company is also looking to sell its wind energy business and expects to complete the deal by the end of this fiscal year. The sale of Aman Resorts and its wind energy business will help DLF achieve its target of reducing net debt to 185 billion rupees by March 31. DLF is learnt to have taken the approval for these sell-offs from its shareholders.
As part of its asset divestment strategy, the developer had sold a parcel of land in Mumbai for about Rs.27 billion to the Lodha Group. Some industry experts believe that the hotel deal has been delayed due to the lower-than-expected bids from the shortlisted companies. DLF was expecting to sell Aman Resorts for at least $400 million. The company, which developes residential and commercial space mainly in north India, has reported a 63% fall in net profit to Rs.1.39 billion for the July-September quarter compared to last year’s Rs 3.72 billion.
Telecom: spectrum auction
End of the boom times?
After the Supreme Court struck down the validity of 122 telecom licences for 2G spectrum issued by former telecom minister A. Raja and called for fresh biddings, things were expected to get back to normal once fresh acutions were completed by the government. But perhaps the telecom regulator TRAI and the government went over the top in fixing a steep reserve price for the 2G spectrum resale. Ignoring the pleas and warnings from industry experts and telecom operators, the government fixed the reserve price at Rs. 28 billion per MHz for GSM spectrum and Rs.36 billion per MHz for CDMA spectrum. But the auction proved to be a fiasco as the government could rope in only Rs.94 billion as against the expected revenue target of Rs.400 billion. The amount generated is also far less than the Rs.677.19 billion that the 3G spectrum sale brought in for the government two years ago. For some inexplicable reasons, the government also failed to put all available spectrum on the block. In fact, the re-auctioning was carried out only in the 800 MHz and 1,800 MHz bands and not in the 900 MHz band. The government withheld 136 MHz spectrum out of 431 MHz in the 1,800 MHz band. As a result, nearly 50% of the available spectrum with the government still remains unsold.
Surprisingly, none of the five operators that participated in the recent auction bid for a Pan India licence due to the high price of Rs.140 billion. Companies who got pan-India licences four years ago had to pay Rs.16.58 billion for it. Also, there were no bidders for the four circles of Delhi, Mumbai, Rajasthan and Karnataka in the 1,800 MHz band. Similarly, no operator bid for the 800 MHz CDMA. Players like Videocon and Tata Teleservices who were initially inclined to bid for CDMA spectrum withdrew their applications. The government, concerned that even the limited auction put up for sale found few takers, has planned another round of auction on March 31, 2013, for the circles that did not attract any bids.
Sale of non-core assets to bring it debt relief
DLF, the country’s leading property developer, is expecting to close the deal on its luxury hotel chain Aman Resorts by the end of December. The Aman Resorts assets for sale include 22 hotels in 12 countries, but not the property in New Delhi. The move to sell the property has been prompted by property developer’s attempts to sell off its non-core assets so as to reduce its whopping Rs.232 billion worth of debt. The company is also looking to sell its wind energy business and expects to complete the deal by the end of this fiscal year. The sale of Aman Resorts and its wind energy business will help DLF achieve its target of reducing net debt to 185 billion rupees by March 31. DLF is learnt to have taken the approval for these sell-offs from its shareholders.
As part of its asset divestment strategy, the developer had sold a parcel of land in Mumbai for about Rs.27 billion to the Lodha Group. Some industry experts believe that the hotel deal has been delayed due to the lower-than-expected bids from the shortlisted companies. DLF was expecting to sell Aman Resorts for at least $400 million. The company, which developes residential and commercial space mainly in north India, has reported a 63% fall in net profit to Rs.1.39 billion for the July-September quarter compared to last year’s Rs 3.72 billion.
Telecom: spectrum auction
End of the boom times?
After the Supreme Court struck down the validity of 122 telecom licences for 2G spectrum issued by former telecom minister A. Raja and called for fresh biddings, things were expected to get back to normal once fresh acutions were completed by the government. But perhaps the telecom regulator TRAI and the government went over the top in fixing a steep reserve price for the 2G spectrum resale. Ignoring the pleas and warnings from industry experts and telecom operators, the government fixed the reserve price at Rs. 28 billion per MHz for GSM spectrum and Rs.36 billion per MHz for CDMA spectrum. But the auction proved to be a fiasco as the government could rope in only Rs.94 billion as against the expected revenue target of Rs.400 billion. The amount generated is also far less than the Rs.677.19 billion that the 3G spectrum sale brought in for the government two years ago. For some inexplicable reasons, the government also failed to put all available spectrum on the block. In fact, the re-auctioning was carried out only in the 800 MHz and 1,800 MHz bands and not in the 900 MHz band. The government withheld 136 MHz spectrum out of 431 MHz in the 1,800 MHz band. As a result, nearly 50% of the available spectrum with the government still remains unsold.
Surprisingly, none of the five operators that participated in the recent auction bid for a Pan India licence due to the high price of Rs.140 billion. Companies who got pan-India licences four years ago had to pay Rs.16.58 billion for it. Also, there were no bidders for the four circles of Delhi, Mumbai, Rajasthan and Karnataka in the 1,800 MHz band. Similarly, no operator bid for the 800 MHz CDMA. Players like Videocon and Tata Teleservices who were initially inclined to bid for CDMA spectrum withdrew their applications. The government, concerned that even the limited auction put up for sale found few takers, has planned another round of auction on March 31, 2013, for the circles that did not attract any bids.
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