Indian revenue assurance vendor Subex has offered to exchange its US$180m of FCCBs for new US dollar denominated bonds. The original bonds had a 2% coupon with a due date of 2012. Because of the fall in Subex’s share price, the likelihood of conversion to equity is remote. The new bonds will have a coupon value of 5%, and will also fall due in 2012.

The official Subex announcement can be read here. The story is reported here and here.

What is not public is the full details of the offer to existing bond holders, which are only available in the ‘Exchange Offer Memorandum’. One guess is that the higher coupon value reflects an attempt to raise new capital from existing FCCB holders. This might be used to fund an acquisition. We shall have to wait and see how many of the existing bond holders agree to the deal and hence if Subex can solve its underlying problem: not generating sufficient cash from existing operations to be able to pay back on the current FCCBs. For Subex, this might be a case of double or quits… and it is up to the investors to decide whether to double up or quit whilst they are behind.

Update: Thanks to Atul Jain of TEOCO, who has posted a comment explaining more about the exchange and Subex’s reasons for offering it. In short, the deal would reduce Subex’s debt leverage and make it likelier that bond holders will convert their debt into equity.

This is another in the irregular series of “it looks like revenue assurance, it smells like revenue assurance, it even tastes like revenue assurance, but it ain’t for telcos.” I find it useful to see analogies between RA in the world of telecoms and similar activities in the rest of the universe. If nothing else, it helps to learn from how others solve related problems in their own industry, as they may have some fresh ideas. It also highlights the potential for revenue assurance to broaden and become a genuinely pan-industrial discipline, and how this might be both an opportunity or a threat to people working in telecoms RA. Take a look at this press release, which is about a vendor that offers monitoring for financial transactions. The question that comes to mind is: if this firm monitors financial transactions in general, and there are plenty of generic financial transactions that are much the same in telcos as other businesses, and telcos are increasingly becoming involved with the financial services market, then is it inevitable that offerings and vendors like this will gain more and more telecoms customers too? Or will vendors who started out focused on telecoms be agile enough and have the scale and expertise to go the other way, winning market share in a generic transaction assurance market?