The promoters of Videocon Group, the Dhoot family, has picked up a 14 per cent stake in Mumbai-based broadband company IOL Netcom Ltd from open market. The Dhoots have picked up 11.72 per cent stake through their investment arm Shree Dhoot Trading & Agencies Ltd, reports The Economic Times. Videocon also owns 1.83 per cent stake through Videocon Realty & Infrastructure Ltd. The report said quoting industry sources that it is believed to be a takeover bid. But the report goes on to add that Videocon Group officials have met IOL Netcom president Siddharth Srivastava to discuss areas of mutual cooperation, but have not talked about any buyout proposal.
The stake in IOL Netcom has been accumulated through various block deals in the market since April this year, till when the Dhoots owned 2.34 per cent stake. Interestingly, the share price of IOL Netcom has been trading at low levels of between Rs 80 to Rs 140 since April this year, against its 52-week high of Rs 580. Earlier this month the company reached its one year low of Rs 58. Non-promoter holding in IOL Netcom is 57 per cent, with Prime Securities and Prime Broking together holding 7.9 per cent stake. India Investment Partners holds 5.76 per cent stake while the rest of the investors hold a stake below 4 per cent.
IOL Netcom, which was previously known as IOL Broadband Ltd, is an ethernet fibre network infrastructure company present in metros. The company was one of the first to offer Internet Protocol Television (IPTV) services in the country and also has a pact with MTNL to offer Voice Over Internet Protocol services. IOL Netcom has been suffering from some time now and for FY08 reported a negative PBT of Rs 21 crore. The company has been incurring high costs as television broadcasters charge telecom companies much more than cable operators for programme feeds.
There are several synergies between Videocon and IOL Netcom. Videocon group is planning to launch its DTH services across the country by the end of the year. Both the companies could develop IPTV network together and IOL Netcom could help Videocon set up its infrastructure. Bharti Airtel is also entering the DTH and IPTV segment, while Reliance Communications Ltd in November last year announced a $500 million pact with Microsoft Corp for IPTV services in India.
Videocon has also built up a 4 per cent in the greeting cards company Archies. Dhoot has also offered to buy Mahendra Nahata’s 36 per cent stake in Datacom Solutions, who has an all-India mobile licence. Videocon is also said to be in talks to buy out the handset business of US based Motorola Inc.