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Spice Mobility to acquire additional 10.78% stake in Spice Digital

The Board Finance Committee at Spice Mobility Limited has decided to acquire an additional 10.78% stake in its subsidiary, Spice Digital Limited, the company informed BSE. Currently, Spice Mobility holds a 89.19% stake in Spice Digital, which will go up to 99.97%. This transaction is expected to be completed in one month’s time. The value of the deal is Rs 34.56 crore, which Spice Mobility will pay in cash.

The timing of this additional stake acquisition is interesting. Last month, Spice Digital got the final Certificate of Authorization (COA) from the Reserve Bank of India (RBI) to set-up as an operating unit under the Bharat Bill Payment System. It had received an in-principle approval from the RBI back in May 2016. It joined other non-bank entities such as Oxigen, PayU, TechProcess Payment Services, Euronet and Paytm to set up a Bharat Bill Payment Operating Unit (BBPOU).

It’s worth noting that Spice Digital also has a digital wallet license, running the Spice Money wallet service. In January this year, Spice Money began processing payments over the Aadhaar Enabled Payment System (AEPS), after receiving the authorisation from the National Payments Corporation of India (NPCI) to offer AEPS services in October last year.

Spice Mobility financials

Spice Mobility’s device business continues to face losses, although at a lower rate:  the segment posted a net loss before tax of Rs 1.38 crore for the quarter ended 31st March 2017, compared to a loss of Rs 8.12 crore in the same quarter last year, and a profit of Rs 80.56 lakh in the previous quarter.

Total revenues of the company stood at Rs 2014.93 crore, with the devices business accounting for 68.07% of its total revenues. Net loss for the period stood at Rs 3.39 crore, down from Rs 23.36 crore in the same quarter last year, and down from Rs 6.95 crore loss crore in the previous quarter.

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The revenues from Spice Mobility’s services business decreased by 12% to Rs 63.06 crore from 71.68 crore in the previous quarter and up marginally from Rs 62.49 crore in the corresponding quarter last year. The segmented reported a profit of Rs 4.37 crore up from Rs 1.93 crore in the previous quarter, but down from Rs 5.48 crore in the same quarter last year. Services business represented about 32% of Spice Mobility’s revenues for the quarter.

According to the filing, Spice Digital’s turnover for FY17 was Rs 182 crore, for FY16 it was Rs 162 crore and for FY15 it was Rs 104 crore.

Spice Mobility’s recent acquisitions

March 2017: Spice Mobility’s subsidiary unit Spice Labs made a “strategic investment” in mobile app developer and promoter, Exponentially I Mobility.

November 2016: The company acquired 100% stake in SVA (Mauritius) through its subsidiary unit Spice VAS Africa Limited. SVA deals with content monetization and supply of IT and software services.

June 2016: Spice sold a 49% stake in its subsidiary Spice Online to Digitone, a subsidiary firm of Beijing Digital Telecom Company.

May 2016: Spice Mobility acquired full equity stake in Omniventures and New Spice Solutions, making both companies a wholly owned subsidiary of Spice Mobility.

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January 2016: It acquired a 22.54% stake in Delhi-based online test platform Sunstone Eduversity, in an all-cash deal.

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