Government mulls to sell remaining 15% Bharti Hexacom stake in tranches, to earn special dividend

The proceeds of Bharti Hexacom’s initial public offering (IPO) would be paid as a special dividend to the government, and the Telecom Consultants India Limited (TCIL) may further sell the remaining 15% stake in multiple chunks.

“Bharti Hexacom Limited (BHL) IPO has fetched Rs 4,275-crore from 15% stake sale of TCIL. The proceeds of IPO shall be paid as a special dividend from the profit of the company after deduction of expenses, taxes and any other expense as per the Company’s Act,” Sanjeev Kumar, Chairman, TCIL told ETTelecom.

Last week, Bharti Hexacom, a unit of Sunil Mittal-driven Bharti Airtel completed shares allotment to the investors following the public issue debut early this month.

The qualified institutional investors (QIB) showed an overwhelming response and the portion was oversubscribed by 48.57-fold.

“The investors have shown confidence in the growth story of the telecom sector. A right mix of price and issue size can attract investors’ interest and fetch better returns,” Kumar said.

The Ministry of Communications’ strategy to sell Bharti Hexacom stake in tranches, according to analysts, worked out well, and is set for a windfall gain for the government.

On Thursday, Bharti Hexacom’s stocks were trading at more than Rs 970 on Bombay Stock Exchange (BSE).

The remaining 15% of stake, if valued at current price, may fetch more than Rs 7,000-crore, taking the total tally to nearly Rs 11,500-crore, surpassing the government’s expectation of Rs 9,500-crore from the IPO.

Following the Department of Investment and Public Asset Management (Dipam) approval, the state-owned company may sell the remaining 15% stake in further three chunks of 5% each, to maximise earnings.

The next chunk will go public after the lock-in period of 6 months and necessary regulatory approvals.

TCIL, a state-run telecom and engineering firm, is expecting to achieve an extraordinary revenue growth of nearly 25% in FY 2024-25, over the FY 2023-24 revenue of nearly Rs 2,500 crores, according to the top official.

Bharti Airtel holds 70 percent stake or 35 crore shares in Bharti Hexacom and the remaining 30 percent shareholding, equivalent to 15 crore equity shares is held by non-promoter TCIL, of which it sold 7.5 crore shares at Rs 4,275-crore.

Early this week, brokerage Jefferies said that Bharti Hexacom has a strong growth potential and represents a strong investment opportunity in the Indian telecom sector.

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