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Government considers selling 15% Bharti Hexacom stake in parts to earn special dividend

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In Short:

Bharti Hexacom’s IPO fetched Rs 4,275 crore from 15% stake sale of TCIL. Investors showed confidence in telecom sector’s growth story. Ministry’s strategy to sell stake in tranches working well. Remaining 15% stake may fetch over Rs 7,000 crore. TCIL expecting 25% revenue growth in FY 2024-25. Bharti Airtel holds 70% stake in Bharti Hexacom. Bharti Hexacom has strong growth potential and is a good investment opportunity in Indian telecom sector.


Bharti Hexacom’s IPO Proceeds to be paid as Special Dividend to Government

NEW DELHI: Bharti Hexacom’s initial public offering (IPO) has raised Rs 4,275 crore from a 15% stake sale of Telecom Consultants India Limited (TCIL), with the proceeds set to be paid as a special dividend to the government. TCIL may further sell the remaining 15% stake in multiple chunks.

Response and Future Plans

Last week, Bharti Hexacom completed shares allotment to investors, with the qualified institutional investors showing strong interest, oversubscribing the portion by 48.57-fold. The Ministry of Communications’ strategy to sell Bharti Hexacom stake in tranches is expected to result in a windfall gain for the government.

Bharti Hexacom’s stocks were trading at over Rs 970 on the Bombay Stock Exchange (BSE) on Thursday. The remaining 15% stake, if valued at the current price, may fetch more than Rs 7,000 crore, surpassing the government’s expectation of Rs 9,500 crore from the IPO.

Sale Strategy

Following approval from the Department of Investment and Public Asset Management (Dipam), TCIL may sell the remaining 15% stake in three chunks of 5% each. The next chunk will be made available after a lock-in period of 6 months and necessary regulatory approvals.

TCIL is expecting an extraordinary revenue growth of nearly 25% in FY 2024-25, over its FY 2023-24 revenue of nearly Rs 2,500 crores.

Investment Opportunity

Bharti Airtel holds a 70% stake in Bharti Hexacom, while the remaining 30% is held by non-promoter TCIL. Brokerage Jefferies recently highlighted Bharti Hexacom’s strong growth potential and investment opportunity in the Indian telecom sector.

Bharti Hexacom offers mobile, fixed-line telephony, and broadband services under the Airtel brand name to customers in Rajasthan and the Northeast.

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