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Bharti Hexacom IPO set for April 3, TCIL selling 15% in Airtel unit

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In Short:

Bharti Hexacom’s IPO opens on April 3 and TCIL plans to divest 15% of its shares in the company. Bharti Airtel will retain a 70% stake in Bharti Hexacom. The government is expected to earn over Rs 5,000 crore from the stake sale. A potential IPO for Bharti Hexacom is seen as a transparent way to sell government stake. Airtel sees no immediate value in acquiring more stake in Bharti Hexacom.

Bharti Hexacom IPO to Open on April 3

Kolkata: Bharti Hexacom’s initial public offering (IPO) opens on April 3, allowing state-run Telecommunications Consultants India Ltd (TCIL) to divest 15% of its shares in the Bharti Airtel unit. Post the IPO, parent Bharti Airtel will retain a 70% stake in Bharti Hexacom, while TCIL’s stake will reduce to 15%. Bharti Hexacom operates mobile services in Rajasthan and Northeast circles.

Anchor Investor Bidding and Closing Date

In a late exchange filing on Saturday, Bharti Hexacom announced that anchor investor bidding would open on April 2, a day prior to the IPO opening date. The IPO is set to close on April 5.

ET had reported on March 21 that TCIL plans to sell its current 30% stake in Bharti Hexacom in two tranches of 15% each. Top industry insiders estimate the government to earn over Rs 5,000 crore from the upcoming 15% TCIL stake sale in Bharti Hexacom.

Details of IPO

Bharti Hexacom has filed a red herring prospectus dated March 22 with the Registrar of Companies for its proposed IPO. It includes an offer for sale of up to 75 million equity shares, representing 15% of the paid-up share capital by TCIL.

Back in January, TCIL had planned to offload a 20% stake in Bharti Hexacom, but it has now decided to divest only 15% and sell the remaining 15% at a later time.

Background and Market Insights

Government-owned TCIL is a telecom engineering and consulting firm with business interests overseas. Bharti Airtel has waived its right of first refusal to acquire a 30% stake in Bharti Hexacom. Global brokerage BofA Securities noted that Airtel’s management believes that a potential Bharti Hexacom IPO would provide transparency in pricing.

Industry experts highlight the potential of fixed wireless services in the Rajasthan and Northeast circles, despite having similar costs for connected home-pass. Parent Airtel had acquired a majority stake in Bharti Hexacom in 2004 by purchasing Shyam Telecom’s shares.

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