Economic Times | March 14, 2011 | Joji Thomas Philip
NEW DELHI: Hitting out at the delays in executing the stake sale, Bharti Airtel has withdrawn its bid to buy out the government’s 30% stake in its subsidiary Bharti Hexacom, which offers mobile services in six north-eastern states (excluding Assam) and Rajasthan. The government had demanded a substantial premium over the Rs 1,800-crore base price fixed by its consultant, Deloitte, and had also sought an additional six-month extension to conclude the sale process.
At the price fixed by Deloitte, Hexacom, which has about 14 million customers, is worth over Rs 6,000 crore. Bharti Airtel’s exit leaves only one bidder in the fray ? Punj Lloyd ? and may put off the much delayed sale process yet again. The government owns 30% of Hexacom through public sector company Telecom Consultants of India Ltd (TCIL) and Bharti Airtel, India’s largest telecom company by market capitalisation and sales owns the rest. Bharti also has the first right of refusal to the remaining 30%.
While five companies had submitted technical bids last year, only Bharti Airtel and Punj Lloyd had put in financial bids in December 2010. In its communication to TCIL, Bharti Airtel has said that its financial bid would be valid only till March 13 and has also demanded that its bank guarantees for its bid be returned after this date. Officials in the telecom department say that a possible reason for the delay is that the government wants to revise the base price. They also add that Deloitte’s assessment was based on Hexacom’s performance in 2009, which did not indicate the current pricing. Another reason for the delay is that the empowered group of ministers (EGoM), headed by finance minister Prabab Mukherjee , has not yet finalised the reserve price based on the consultants’ report.
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