Government plans to raise nearly Rs 7,000-crore from stake sale in Bharti Hexacom

Department of Telecommunications (DoT) plans to raise as much as Rs 7,000 by selling a 30% stake in state-owned Telecommunications Consultants India Limited (TCIL) in Bharti Hexacom, an unlisted company founded in 1995 to provide telephony services in Rajasthan and northeastern circles.

The Telecommunications Department (DoT) is considering selling TCIL’s 30% stake in Bharti Hexacom and is expected to raise nearly Rs 7,000 crs depending on the parent company’s market value.

As part of the event, Bharti Hexacom would select a public listing of its shares and issue an initial public offering (IPO) following regulatory approvals.

SBI Caps has been convened to value and complete the transaction of TCIL.

The department is in the final stages of issuing an instruction to the state-run company, which according to the known would first negotiate with Bharti, who is entitled to refusal under the terms and conditions of the agreement between the two.

Bharti Hexacom is a joint venture (JV) between Bharti Airtel, which owns a 70% stake and the state-owned TCIL, which owns a 30% stake in JV.

Initially, TCIL planned a disinvestment of the shareholding in Bharti Hexacom, but the Department of Investment and Public Asset Management (DIPAM) indicated that the department did not have a mandate to commence disinvestment of a public sector entity in another private company.

The move, analysts say, could be to accommodate a “global strategic investor” who would bolster the telecommunications company’s economy ahead of a mid-year 5G spectrum auction and anticipate top-dollar investment in the rollout of next-generation technology.

The investment has been on fire for more than a decade.

In 2011, the state-controlled company’s plans to leave Bharti Hexacom had been shattered two years ago when then-Cabinet Secretary KM Chandrasekhar rejected the reserve price of Rs 1,800 crore set by Deloitte for its 30% stake as “too low”.

Back in 2006, the state-owned company rejected the 262.5 crore Rs that Bharti Airtel had offered instead of its 30% stake.

The state-run company, through Hexacom’s share sale, seeks to raise cash flows and ease its balance sheet. It has an annual turnover of around Rs 1,750 crore, and expects to double the turnover in 2025, to reach Rs 3,500 crores. MacProTricks