A stake sale of single circle operation may give valuation trends in the industry

Punj Lloyd, Bharti Airtel likely bidders for TCIL stake in Hexacom
Corporate - Others
By: Newswire18 Staff| NewsWire18 | New Delhi, September 15, 2010
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Bharti Airtel and Punj Lloyd have likely submitted bids to acquire Telecommunications Communications India Ltd's 30% stake in Bharti Hexacom, a senior official with the state-owned company told NewsWire18 today.

State-owned Bharti Hexacom offers mobile services in Rajasthan and the northeast, with a subscriber base of 12.47 mln as on Jul 31.

While Bharti Airtel's bid is understandable given that it already holds 70% in the telecom operator, Punj Lloyd's comes as bit of a surprise. Calls to Punj Lloyd's management to enquire about the bid went unanswered.

TCIL, which has already obtained the consent of the Cabinet Committee on Economic Affairs, wants to sell the stake as Hexacom is not a dividend paying company.

If Punj Lloyd's financial bid is higher than Bharti Airtel's, the latter would still be given the option to match Punj's offer as it has the right of first refusal on TCIL's shares.

The TCIL official said the Hexacom stake sale would reduce the need for fresh funds through an initial public offering.

"As a result of the stake sale, the IPO may comprise sale of only government equity," he said.

TCIL is one of the only two unlisted entities that come under the telecom department, the other being Bharat Sanchar Nigam Ltd. The listed entities are Mahanagar Telephone Nigam Ltd and ITI Ltd.

TCIL has appointed Mumbai-based RK Shah & Co to value the company's 30% stake and Deloitte Touche Tohmatsu to advise on the Hexacom stake sale process.

Though Punj's bid may raise eyebrows, the company is no stranger to telecom services. It used to run broadband services by the name of Spectranet for retail and corporate clients until 2008 when the business was sold off to a joint venture company of Shyam Group and Spanco Telesystems.