FM radio station, Radio City is ready to hum a new tune. The radio channel is considering going public. CNBC-TV18 reports that the debt-free company has Rs 400 crore capex planned as it enters another phase of expansion.
If all goes well, Radio City's melodies will reach the remotest cities in India, as the company enters expansion mode, ahead of the phase three auctions later this year and the company is looking to almost double its radio stations to 40.
Apurva Purohit, CEO, Music Broadcast says, “They will be giving out 800 licenses in 300 cities and we are pretty aggressive about our expansion plan. We hope to grow our current set of 20 cities to 35-40 cities. So we will be looking for funding and the approximate amount required is Rs 350-400 crores.”
The company admits that the upcoming spectrum auctions alone may eat up a large chunk of its Rs 400 crore war chest. So a plan to hit the capital markets with an initial public offering is also on the cards.
Radio City says it is banking on the fact that it is a debt-free company and has a strong footing on the margins front to ensure a successful fund-raising drive, whether through debt or an IPO.
Purohit further says the company has been delivering an EBITDA margin of 30 percent and is sitting on a small pool of cash.
She is confident that with the expansion plans going through, ad revenues will increase. Currently, the medium of radio gets just 5 percent of the country's total advertising spends, and this number is expected to double over the next three-four years.
The growth phase will kick in after the December spectrum auctions. That's when radio stations can expand their geographical presence and reach, and get more advertisers to dance to their tune.
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