• FEBRUARY 18, 2000

Satyam Infoway prices ADS at $80; $ 130 m issue oversubscribed

Satyam Infoway has priced its second Amercian Depository Shares issue at $ 80. This is to be used to fund the second leg of its $115 million acquisition of Indiaworld Communications.

Satyam Infoway one of the Internet service providers, has around 87,000 subscribers with services being offered in the 27 cities throughout India. The revenues of the company for the first half stood at Rs. 208 m with around 40% of its revenues from internet services, another 40% from the internet roaming software and the balance from e-commerce, EDI and ATM relay services. The company has a loss of Rs. 140 m in the first half.

The last time the company had issued an ADS, it was priced at $18. Thereafter the company had announced a 4 for 1 split to improve the liquidity of its ADSs. The Indiaworld acquisition has helped the Satyam Infoway raise its valuations and price its issue at current levels.

However, the frequent dilutions will hit the company’s net worth in the future if the Indiaworld sites do not generate enough revenues in the future. In the current year the company is estimated to report a loss in the range of Rs. 220 m, but with even US investors getting restless with the loss making dot com companies there could soon be a time when investors start demanding adequate return ratios for valuations to stay at current levels.

For the present though, the sentiment would boost the valuations of the parent Satyam Computers too. The parent holds 59% of Satyam Infoway’s equity.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407