“Is the Cellebrum IPO still on?” was the question two senior execs at the Telecom CEO Conclave asked me yesterday.
My sense was that given the market conditions and the worldwide panic across financial markets, they would defer it until the market recovers. It would be brave, perhaps foolhardy, for a company to try to raise money from the public until this storm passes by.
As a case in point, take a look at OnMobile Global, which is probably the market leader in the Mobile Data Services or VAS space. It ended last week at Rs. 484.90, just Rs. 44.90 above its issue price, and much much below its 7 month high of 744.70; it listed on Feb 19th 2008. Would Cellebrum take a risk is such volatile markets?
Confounding the issue, according to the Economic Times, is that SEBI has denied Cellebrum a listing because the bankrupt Lehman Brothers cannot offload 2,541,454 shares (7.58% stake) in the company. That assessment appears to be incorrect. We couldn’t locate the relevant notice on SEBI’s website, but there was a mention of the processing status:
“File closed vide letter dated 25-July-2008 to BRLM, on account of non-compliance of SEBI DIP Guidelines with regard to eligibility norms and disclosure of Financial information“
The file was closed before Lehman Brothers filed for bankruptcy. ET adds that the BK Modi group may buy back Lehman Brothers stake in Cellebrum, when the shares are made available from the bankruptcy court. So will Cellebrum look at raising capital from other sources? Do take a look at their financials here, and download the DRHP here.
Related:
– Cellebrum Files DRHP; Nine Month Operating Income of Rs. 734.56 Million; Pre-IPO; Lehman Stake Sale
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10 Comments until now.
Onmobile good buy at this price hold it for next two years. Will creat large value. CAGR growth is >40% in subdued economic growth.
sane man: any disclosures? :P
Does’t really matter. well covered stock almost by all the top rung FIIs in India. Disclosures- Do not hold any stocks of this company.
This could be a serious setback for Cellebrum.
Their agreements with spice will be expiring and idea might not renew those revenue streams.
Anyone else in vas space worth an ipo ?
VASGuy – Only some services. According to the DRHP, a contract was signed with Spice a few months ago:
The contract includes roaming and VAS services (mobile radio, BGM, CRBT) for three years, and SMS, GPRS, roaming and outbound dialer services for nine months.
Tough IPO market , sentiments depends on secondary market. IMI Mobile based out of Hyderabad will look for raising money from Capital Market.
I dont believe any company will go for funding right now if it can avoid it. Also, i am loathe to suggest any new investment in this space. Why?
1] I am also very circumspect about the estimated mobile numbers being thrown about in India. 1.2 Billion people, about 5.3 people per household about 230mil hh. Assume 20% are rural poor that leaves 184million households. How many phones per house hold do we expect? At 735 million we are saying 4 phones per household as a national average!! Thats BS! Operators already are overstating their numbers by 35% or more and keep showing higher growth to keep the pressure on the regulator and DoT.
2] Shares and payouts – no VAS company is making money today. Bollywood has become an expensive trading business with huge values being exchanged for here and now revenues. There is no way to break even or make money on bollywood anymore specially when only 25% of EUP or lower comes back to the content owner after 3 – 6 months.
3] Extreme competition: Competition by small and extemely small players in driving revenues down for content creators. From 35% share norms, today mobile operators have been able to drive shares down to an average of less than 20%
4] Too many tech providers: Onmobile last year was king of the hill in terms of voice platforms. Today they have 4 to 6 new providers chipping away large chunks of business.
I hope I’m wrong but it feels like a bubble of hot air!
Very intelligent @MobStir. What is your call on off deck players (read: mytoday etc.)?
Why should IMI need money @sane man?
Off Deck play has to have a billing mechanism that allows for a much larger flowback to the content/platform owner. Else, the cost of content & marketing will kill you. Ad-revenues alone will not allow you to survive. Also, operators need to support this play big time.
The traditional off deck model is being threatened by the moves being made by Nokia with Ovi (reminiscent of the IE bundling with windows – Buy my device? have to use my portal).
Quite a few of the operator VAS groups are run by a bunch of shortsighted kids with half a strategic brain between all of them. They are more excited playing games between VAS providers that they dont realise the games being taken away from them.
Examples? Nokia is launching ovi which will bypass operator decks…what does airtel do? gives their wap site to be managed by enpocket (nokia).
Motorola buys Soundbuzz and will pre-embed their store in phones, bypassing the operator again
Meanwhile, operators keep squeezing out off deck players and dont satisfy customer needs. Hence, new handset players enter with their pre-embedded services which the market takes up in a big way.
The operator vas guys will have to remain focused on CRBTs and P2P sms.
What happens to off-deck play? I dont know!!
VAS Guy, Acquistion in internatinal market with right product/technology/consumer base is considered as one of the growth engines fro VAS cos. OnMobile has done it before and looking for more. IMI may have similary objectives . Well, you don’t raise money simply because you need it . Some times you do it give exit for VC’s/PE’s . OnMobile is sitting on pile of cash today.