Radio Mirchi will pay around Rs 80 crore as one-time-entry-fee for migrating the existing seven stations. The Radio Mirchi IPO will close on January 27.
NEW DELHI: The accounting statement of Radio Mirchi, the FM brand of Bennett Coleman’s Entertainment Network India Ltd (ENIL), for six months ended September 2005 has shown profit without accounting for amortisation of one-time-entry fee (OTEF) for migrating its existing seven stations to the second phase of private FM radio.
Radio Mirchi will pay around Rs 80 crore as one-time-entry-fee for migrating the existing seven stations.
The Radio Mirchi IPO opened on January 23 and will close on January 27. It has priced its IPO of 12 million shares at Rs 144-162/share.
Mirchi’s accounting statement shows a profit (after tax) of Rs 10.83 crore (EBIDTA Rs 11.05 crore), but it has not considered the OTEF of Rs 80-crore for migration of seven stations. The migration fee of Rs 80 crore will be amortised at Rs 8 crore per annum during the 10 years of the licence period.
According to an analyst, the profit of Rs 10.83 crore for six months ended September 2005, annualised at Rs 21.66 crore, should be reduced by Rs 8 crore. So, after the provision for amortisation of the one-time-entry-fee, profit of Radio Mirchi will go down to Rs 13.65 crore.
Migration fee for an existing station is calculated as an average of all the successful bids in a city/town during FM-II. 337 frequencies across 91 cities have been thrown open for bidding during FM-II. While bidding for A/A plus category, north and east is over, stations in western and southern regions will be up for grabs next.
In its IPO document, Radio Mirchi has stated that “in our financial statement as at and for the six months ended September 30 2005, we have not accounted for such OTEF (migration of existing seven stations) payments and our financial statements for periods after April 1, 2005, may include a charge depending on the amount of OTEF payable by us, if we migrate any of our existing licences.”
It added: “We will be required to make corresponding adjustments to our financial statements for periods after April 1, 2005, which have been prepared at present based on the revenue-sharing regime under the phase two policy.”
Meanwhile, Radio Mirchi is all set to lose the number one status that it occupied so far, in terms of number of stations held in the country. Taking into account, the three rounds of bidding in FM-II, Adlabs is the highest at 41, Sun is next with 39, and Mirchi third with 17 stations (includign those of the first phase). Also, the Sun group’s FM stations will now be present in all the cities that Mirchi operates in.
In terms of investment in FM radio licences, the Sun group is on top with Rs 162.34 crore for 39 stations; next is Radio Mirchi with Rs 155.21 crore for 16
stations (inlcuding migration fee); and Adlabs at number three with Rs 127.11 crore for 41 stations.
According to managing director of Bennett Coleman Vineet Jain, competition is good for growth and that there’s plenty of scope in FM radio.
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