DoT plans to raise INR 7000 crore after selling its stake in Bharti Hexacom

The Department of Telecommunications (DoT) is planning to raise about Rs 7,000 crore by selling the 30 per cent stake of Telecommunications Consultants India Limited (TCIL) in Bharti Hexacom.

Bharti Hexacom is an unlisted company that offers mobile services in Rajasthan and northeast circles and is a joint venture between Bharti Airtel, which holds 70 per cent stake in the JV, and state-owned TCIL which has 30 per cent shares in the firm.

A proposal for TCIL selling its stake and exiting the joint venture has been pending for over 15 years.

"Based on present valuation and market cap of Bharti Airtel, TCIL stake in Bharti Hexacom stands at around Rs 8,900 crore. This keeps changing based on the market cap of Bharti Airtel. The final value that the government will get is dependent on the time of exit from the JV and market cap of Bharti Airtel," a source said.

Under the arrangement, Bharti Hexacom would reportedly opt for a public listing of its stocks and issue an IPO upon regulatory approvals.

The DoT is in the final stages of issuing a direction to TCIL; it will first negotiate with Bharti Airtel, which has a right to first refuse as per the terms and conditions of the agreement between the two.

The services of SBI Caps have been engaged for valuation and completion of transactions by TCIL.

In 2006, Bharti Airtel had offered Rs 262 crore for the 30 per cent stake, which was turned down by the then government and it had asked TCIL for revaluation. In 2011, Deloitte suggested a valuation of Rs 1,800 crore but the then cabinet secretary K M Chandrasekhar asked the telecom ministry to re-evaluate it.

Several MPs had complained to the government that the valuation suggested by Deloitte was too low given that Bharti Hexacom had a turnover of Rs 1,700 crore and profits of over Rs 400 crore in 2010.