Shrinking market cap compel MSOs

Den Networks shares have crashed to a new low at Rs 5.03 billion. The downfall was caused by the recent wild swings in the global market. Shares of Den fell 9.93 per cent to close on 18 August at Rs 38.55 on the BSE after it hit lower circuit. This is the third big slide, after tumbling 20 per cent on both Tuesday and Wednesday.

As per an analyst at a broken firm the selling pressure from EMSAF Mauritius and Fidelity has triggered the fall. The market cap of Den at one stage was over Rs 24 billion and the fall could reflect on a negative sentiment the cable sector till he government mandates digitalisation.

EMSAF Mauritius, a pre-IPO investor, sold 1.6 million shares on 17 August, triggering a 20 per cent fall that day as the scrip closed at Rs 42.8 on the BSE. Den had raised Rs 750 million from EMSAF Mauritius in July, 2009. EMSAF was holding 3.58 million shares amounting to 2.74 per cent stake in Den Networks before it sold its 1.6 million shares.

Raghav Bahl-promoted Network18 Group has also made its intentions clear that it wants to exit from Den. It has cut its stake to 4.96 per cent from 7.55 per cent.

According to a senior official of the company, Den is sitting on a cash of Rs 2.27 billion while its debt is Rs 1.25 billion and it doesn’t have any fund raising plan right now. He also confirms that the company is performing well.

The corrosion in market capitalization is not confined to Den. Hathway Cable & Datacom, the other big MSO which is listed, has seen its market cap shrink to Rs 12.18 billion.

The fall in market value has made it difficult for other cable companies to raise capital. Citigroup Venture Capital-controlled You Broadband and Cable has been unable to go ahead with its proposed Rs 3.58 billion initial public offering (IPO) while IndusInd Media and Communications has failed to conclude talks with investors for raising Rs 5 billion.

Source: http://cablequest.org/news/broadband-and-iptv-news/item/262-shrinking-market-cap-compel-msos.html
Source: http://cablequest.org/news/broadband-and-iptv-news/item/262-shrinking-market-cap-compel-msos.html