Sale of government stake in Bharti Hexacom off?

10 Aug 2011

India’s Department of Telecommunications (DoT) has reportedly mothballed plans to sell off the government’s 30% stake in Bharti Hexacom, a subsidiary of the country’s largest cellco by subscribers Bharti Airtel. According to India’s Economic Times, the state owns its holding in Hexacom via public sector company Telecom Consultants of India (TCIL), and while it had previously indicated its intention to divest its interest, it is believed to have reconsidered that stance in light of the operator’s recent strong performance, coupled with the prospect of a higher valuation for the holding on the back of the launch of 3G services.

The government did actually invite bids for the stake last year, after consultancy firm Deloitte had fixed a base price of INR18 billion (USD395 million) for the holding. While five companies submitted technical bids, only two – Bharti Airtel and engineering and construction group Punj Lloyd – put in financial bids in December 2010. March 2011 however saw Bharti Airtel withdraw its bid, citing delays by the government in executing the transaction as the reason. The sale process was subsequently put on hold in May this year after the cabinet secretary looked to have the base price re-evaluated following complaints it was too low.