Bharti to launch IPO by January end

MUMBAI: A telecom company expected to grab a major chunk of the Indian

market, possibly the fastest growing worldwide in coming years, on Wednesday

announced an initial public offering (IPO), the first by any of the companies

expected to dominate the newly deregulated market.

Bharti Tele-Ventures said it will offer 185.3 million shares, representing a

10 per cent stake, to investors. Subscriptions will open on January 28 and close

on February 2. Bharti Tele-Ventures, the holding company for most of the telecom

service operations of the Bharti group, India's largest cellphone service

provider, set a floor price of Rs 45 a share.

"Just on the basis of the floor price...Bharti will be among India's top

10 companies in terms of market capitalization," Akhil Gupta, Bharti's

Joint Managing Director, told a news conference in New Delhi.

At 45 rupees per share, Bharti would raise a minimum of Rs 8.34 billion

($172.7 million), to be used to bankroll expansion of its cellphone and

fixed-line services, and the start of domestic long-distance and international

phone service.

Analysts said the actual price, to be set through a book-building process,

will almost certainly be higher as the floor rate is below the Rs 52 per share

paid by a clutch of private equity investors last May.

Bharti raised $481 million then through a private placement of shares to

Singapore Telecom, private equity fund E.M. Warburg Pincus, International

Finance Corp and New York Life Insurance Co. At the time, Bharti founder and

chairman Sunil Mittal estimated the company to be worth $2 billion.

The group has since acquired licenses to provide mobile phone service in nine

more circles, fixed-line service in four more states and has started providing

domestic long-distance telephone service, making it the first private company to

do so. The shares will be listed on the Bombay and National stock exchanges and

begin trading on February 17.

The investments by Singtel and Warburg Pincus are among the biggest

investments worldwide by the two firms. Singtel has so far invested $650 million

in Bharti, making it the Singapore phone giant's second-largest international

investment.

Gupta said investor interest in issue could be heightened by the fact there

have been no telecom IPOs in Asia in the past 3-4 months, nor are any others

slated over the next four months. "We're glad that we are coming at a time

when the market is not at its peak," Gupta said.

"We're glad that every analyst today predicts that 2002 will be a much

better year for equity markets than 2001 was. There's a big upside and the

management is extremely delighted to see all that upside going to our

shareholders." Under the Bharti IPO prospectus, the company can sell up to

60 per cent of the issue to qualified institutional investors, up to 15 per cent

to wealthy individuals, expatriates and corporates and the rest to small retail

investors.

Speaking to a separate news conference in Mumbai, Mittal said foreigners

could conceivably buy up to 73 per cent of the issue and domestic investors as

little as 27 per cent. Bharti ranks among India's top three mobile phone

companies competing with Hong Kong's Hutchison Telecom and an Indian venture of

US giant AT&T.

(With reporting by Santosh Menon in New Delhi)

(C) Reuters Limited.