Bharti Airtel arm Bharti Hexacom Receives SEBI Nod for IPO Fundraising
Bharti Hexacom, a subsidiary of telecom giant Bharti Airtel, has been granted final approval by the Securities and Exchange Board of India (SEBI) to initiate its initial public offering (IPO). The IPO consists solely of an offer for sale (OFS), with no provision for fresh issue, meaning all proceeds from the IPO will go to the selling shareholder. Operating in the telecommunications sector in Rajasthan and the North East Circle, the company has yet to disclose the price range and size of the IPO.
Having submitted its draft red herring prospectus (DRHP) to the capital market regulator SEBI in January of this year, the company received an observation letter on March 11. This marks the first IPO from the Bharti Group in 12 years since the listing of Bharti Infratel in 2012. Bharti Hexacom intends to raise funds through an offer for sale (OFS) of up to 10 crore equity shares, each with a face value of Rs 5, by its sole public shareholder, Telecommunications Consultants India.
Currently, Bharti Airtel holds a 70% stake (or 35 crore equity shares) in Bharti Hexacom, while the Government of India through Telecommunication Consultants of India Limited owns the remaining 30%, or 15 crore, equity shares in the mobile telephony services company. Incorporated on April 20, 1995, Bharti Hexacom is the largest mobile telephony services in Rajasthan and North Eastern circles in India, which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.
Additionally, the company delivers fixed-line and broadband services in Rajasthan under the 'Airtel' brand. As of September 30, 2023, Bharti Hexacom had committed ₹20,300 crore to capital expenditure for its future-ready digital infrastructure. Leveraging its affiliation with its parent company, Airtel, it benefits from extensive digital infrastructure, digital experiences, and digital services offered to its customer base, resulting in significant synergies.
Regarding its financial performance, in FY23, the company recorded a net profit of Rs 549 crore, marking a decrease of 67.2% compared to the preceding year. However, revenue from operations witnessed a 21.7% increase, reaching Rs 6,579 crore. In the first six months ending September FY24, net profit declined by 64.6% year-on-year to Rs 69 crore, impacted by elevated tax expenses and extraordinary losses. Nonetheless, revenue saw an 8% year-on-year growth, reaching Rs 3,420 crore. SBI Capital Markets Limited, Axis Capital Limited, BOB Capital Markets Limited, ICICI Securities Limited, and IIFL Securities Limited serve as the Book Running Lead Managers (BRLMs) for the IPO. Concurrently, Bharti Airtel's shares were trading slightly higher by 0.4% at Rs 1,232.60 on the BSE, compared to the previous closing price of Rs 1,227.85.