Telecom dept proposes to sell govt’s 30% stake in Bharti Hexacom Ltd in single tranche via initial public offering
New Delhi: After mulling various options, the Telecom Department has proposed that the sale of government’s 30 percent share in Bharti Hexacom Ltd (BHL) be done in a single tranche through an initial public offering (IPO) even though consultant Ernst & Young had suggested that the divestment be conducted in tranches.
The government expects to raise somewhere between Rs 8,500 crore and Rs 10,700 crore through this share sale before the end of this fiscal year, sources said.
The government holds 30 percent equity stake in BHL through state-run Telecommunications Consultants India Ltd (TCIL) while Bharti Airtel holds majority 70 per cent. Bharti Hexacom provides telecom services in Rajasthan and the Northeast.
Last November, the TCIL board had approved that the share sale be through an IPO with phase 1 offloading 10 to 15 percent and the balance as Follow-on Public Offer. However, it was later realised that the shareholder agreement would automatically terminate “if shareholding of any shareholder goes below 26 per cent” on that date.
The TCIL board therefore reviewed its previous recommendation on March 10 and decided that the disinvestment of TCIL’s entire stake in BHL be done in a single tranche at an average value of Rs 9,530 crore. It expects to complete the process within eight months of approval. BHL is being authorized to launch the IPO, appoint intermediaries, fix the price or price band, collect the proceeds and transfer the money to TCIL which will, in turn, transfer it to the Consolidated Fund of India. This route is being taken as per the guiding principles issued by the Department of Investment and Public Asset Management (DIPAM), sources said.
And once the divestment is over, TCIL will be considered for strategic disinvestment in line with the recommendation of the Niti Aayog. The sale of TCIL shares in BHL has witnessed twists and turns since the Cabinet Committee on Economic Affairs approved the proposal in August 2009. It was called off in 2011 after several parliamentarians complained that the valuation suggested by Deloitte was too low.
Subsequently, the priority shifted to listing TCIL first before its exit from BHL but due to the sorry financials of TCIL this too was held back. In April 2021, Niti Aayog went back to its original proposal of TCIL exiting BHL after which its strategic disinvestment would follow.
