Bharti Airtel’s subsidiary Bharti Hexacom, a telecommunications service provider with a strong presence in Rajasthan and Northeast India, has received approval from the Securities and Exchange Board of India (SEBI) to launch an initial public offering (IPO). This move marks a significant step for Bharti Hexacom, currently valued at approximately ₹20,000 crore, as it prepares to enter the public market with a potential offering size of ₹2,000 crore.
Understanding the ₹2,000 Crore Offer for Sale (OFS)
Unlike a traditional IPO where a company issues new shares to raise capital, Bharti Hexacom’s IPO will be an Offer for Sale (OFS). This means the company itself will not receive any funds from the offering. Instead, existing shareholder Telecommunications Consultants India Ltd. (TCIL) will be offloading a portion of its holdings. While the exact number of shares hasn’t been finalized, industry reports suggest TCIL might offer around 10% of Bharti Hexacom’s paid-up equity share capital, translating to a potential divestment value of ₹2,000 crore, assuming a conservative price per share of ₹20. This strategic decision could unlock value for TCIL and increase liquidity for Bharti Hexacom’s shares.
Bharti Airtel Retains Control
Following the OFS, Bharti Airtel will continue to hold a majority stake in Bharti Hexacom, with the exact percentage dependent on the final number of shares offered. This signifies Bharti Airtel’s continued confidence in the future prospects of its subsidiary, particularly in light of the growth potential in the Northeast telecom market.
What to Watch for Next
While Bharti Hexacom has received SEBI approval, the company has not yet disclosed a specific timeline for the IPO. Investors are eagerly awaiting details such as the final offering size, the price band (between ₹15-₹25 per share is a possibility), and the issue date. These factors, along with Bharti Hexacom’s subscriber base (estimated to be north of 15 million) and its performance compared to other telecom players in its operating regions, will be crucial in gauging investor interest. Additionally, the overall health of the Indian telecom sector, currently undergoing consolidation, will be a key determinant of the IPO’s success.
Market analysts are cautiously optimistic about the Bharti Hexacom IPO. The company’s strong presence in a growing market (Northeast India boasts a telecommunication penetration rate lower than the national average) and its backing by the established Bharti Airtel are positive indicators. However, a successful IPO will depend on Bharti Hexacom effectively communicating its growth strategy, which might include network expansion plans and data-focused service offerings, to potential investors.
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