UK based Cellcast PLC intends to offload its entire investment in Cellcast India, in return for a partial settlement of the money due under its IP licensing agreement. The group stated last month (we missed it then) that this decision was made by the company’s board, and that they no longer have any interest in operating CAH or Cellcast India. Cellcast India operates TV shows like Bid2Win, astrology, Tambola among others, in India, which monetize largely through premium messages.
Cellcast PLC currently has 12% stake in Cellcast India. It had offloaded its majority stake in Cellcast Asia Holdings (CAH) last year and had inked an agreement with CAH (Cellcast Asia Holdings) to buy back 3,221,555 shares in CAH for US$1.5 million in October 2011. Cellcast Asia Holdings had also raised $9.5 million in a fresh round of funding from Vertex, a wholly-owned subsidiary of Temasek Holdings.
Cellcast PLC noted that this decision was taken after a poor earning results during its first half year period ended June 30, 2012. While Cellcast India’s revenues were not revealed, Cellcast PLC had reported a total revenue of £9.8 million (Rs 85.19 crore) for the half year ended June 30, 2012, registering a 13% decline rom £11.4 million (Rs 99.1 crore) in H1 2011. It had also reported a total loss of £119,000 (Rs 1.03 crore) for the half year period, as compared to a profit of £609,000 (Rs 5.29 crore) in H1 2011, which explains the need for an exit.
Discussing its results, the group noted that Cellcast India’s financial position had further worsened in the first half of 2012, due to TRAI’s regulations which had reduced premium mobile tariffs for Cellcast India’s primary services, thereby affecting its margins. However, it is possible that things could have changed for the company, now that TRAI has relaxed its guidelines on premium SMS.
Nevertheless, the decline in Cellcast India’s business earlier this year did impact Cellcast PLC: The group mentioned that due to the dip in Cellcast India’s margin, the company had delayed its payments to Cellcast PLC, as per its IP Licensing agreement. Cellcast PLC had listed adequate provision against these payments on December 31, 2011 and noted that no additional provision had been required during the period.
As for Cellcast India’s situation, the group stated that Cellcast India is currently exploring a reposition and reorganization of its business.
Cellcast India This Year
In April 2012, Cellcast India had received FIPB approval to undertake additional activities to set up three non-news and current affairs television channels in Hindi, Tamil and Telugu in the country, although there was no new cash inflow.
The company had claimed to have over 5 million monthly unique users on its properties and had launched its first Interactive channel MyTV on DTH, by partnering with Airtel and Reliance in December 2011. The channel was expected to air shows pertaining to astrology, matrimony, dating, auctions, interactive shopping, contests, and gameshows like Tambola. The company had claimed to have over 25 gameshow formats and expecting to reach 30% of the Hindi speaking market by Q1 2012, although it had mentioned that it will distribute its channels only through DTH and CAS mandated areas.
– Cellcast’s Channel Plans; Average ARPU Rs 50; Will Seek Funding
– Cellcast Plans 24×7 Interactive TV Channel; Cellcast Asia FY10 Profit $2 Million
– Cellcast Gets IPL Mobile Content Rights For India, Covering SMS, Voice And USSD