After three-and-a-half years of its failure to sell government-owned Telecommunications Consultants India Ltd’s (TCIL) 30 per cent stake in Bharti Hexacom, the government has again initiated an exit move. Bharti Hexacom provides GSM mobile services in Rajasthan.
All ministries have given their approval to a Cabinet note moved by the Department of Telecommunications (DoT) to sell the stake. Bharti owns the remaining 70 per cent stake.
But as per terms of the agreement, Bharti has the right of first refusal. This means that Bharti has an option to buy the equity by matching the price quoted by the highest bidder, whenever bidding takes place. This is an important factor why there is not much investor interest in the company. Moreover, Hexacom is not a listed company and it would be difficult for any investor to exit from it.
In 2006, when the government invited bids for selling TCIL stake, there was only one suitor — Bharti. The price offered by Bharti Televentures was much lower than the reserve price worked out on the basis of valuations.
In 2006, against a reserve price of Rs 178.37 per share, Bharti offered Rs 48.83 per share or Rs 262.5 crore for 30 per cent stake. At the reserve price, the government would have got Rs 961.57 crore. As a result it rejected Bharti’s offer.
The Cabinet note says that a global bidding process should be followed for the stake sale.