Airtel arm Bharti Hexacom gets Sebi nod to raise funds via IPO

Bharti Hexacom, which is owned 70% by telecom service provider Bharti Airtel Ltd., received capital markets regulator Sebi's go-ahead to raise funds through an initial public offering (IPO). This will be the first IPO from the Bharti Group after over a decade.

The last IPO to have come out from the Bharti Group was Bharti Infratel, now known as Indus Towers, which was listed back in 2012.

The latest IPO is entirely an offer for sale (OFS) of up to 10 crore shares by the only public shareholder, Telecommunications Consultants India. Since the issue is an OFS, Bharti Hexacom will not receive any proceeds.

Bharti Hexacom had filed its draft papers with the Securities and Exchange Board of India (Sebi) earlier in January 2024.

As per the draft red herring prospectus (DRHP), parent company Bharti Airtel holds a 70% stake or 35 crore equity shares and the rest 30% shareholding or 15 crore equity shares is being held by Telecommunications Consultants India.

On March 11, the capital markets regulator issued an observation letter on the IPO draft papers of the company. In Sebi parlance, the issuance of an observation letter means the company can launch its IPO within the next one-year period.

Bharti Hexacom runs mobile services in Rajasthan and the Northeast telecommunication circles of India, which comprises Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura. It has a market share of 40% in Rajasthan and 50% in the Northeast.

Bharti Hexacom, as per its annual report, is targeting to cover all the urban areas and a few pockets of rural areas with 5G services by March this year. Airtel’s 5G Plus offers up to 30 times faster download speeds than 4G, it claimed in its annual report adding that the 5G handset ecosystem is gradually evolving with more choices for customers at affordable price points.

For FY23, the Airtel unit recorded a net profit of ₹549 crore. Its revenue from operations remained strong rising 22% to ₹6,719 crore.

For the six months ended September, the company posted a revenue of ₹3,420 crore, compared to ₹3,167 crore in the same period a year ago. However, its net profit declined to ₹69 crore from ₹195 crore in the year-ago period. The profit was impacted by higher tax costs and exceptional loss.

SBI Capital Markets, Axis Capital, BOB Capital Markets, ICICI Securities, and IIFL Securities are the book-running lead managers to the IPO, while Kfin Technologies Limited is the registrar.

CNBC-TV18 was the first to break the story in November last year.

Shares of Bharti Airtel settled 0.0082% higher at ₹1,225.40 on Tuesday. The stock has gained 21% so far in 2024.