Anurag Sood and Robin Elsham
MUMBAI: Bharti Tele-Ventures Ltd., a major telecommunications company, could
raise as much as Rs 18.5 billion through its impending initial public offer,
making it the largest IPO ever in the country, analysts said on Friday.
Some analysts estimate the company could get up to Rs 100 a share for the 185
million shares on offer. Others, though, estimated it would do well to get half
that much. The company has not yet set the price. It plans to do so after
surveying how many shares institutions, brokerages and private investors are
keen to buy and at what price. "Market conditions are tough, but with the
company's strong standing in the market, it could get up to Rs 100 for its
shares," said an analyst at a domestic brokerage.
Another analyst, who spoke on condition of anonymity, estimated the likely
range at only Rs 40-50 a share, citing concerns over Bharti Tele-Ventures huge
losses and the threat from competition and lower tariffs. The company expects to
complete the IPO by early 2002.
Bharti Tele-Ventures is one of the main holding companies of unlisted Bharti
Enterprises. Over the past year it has emerged as one of the strongest
competitors in the fast-changing and rapidly growing Indian telecommunications
market. It runs four wholly owned subsidiaries -- Bharti Cellular in the mobile
phone business, Bharti Telenet in the access business, Bharti Telesonic in the
long-distance business and Bharti Broadband Networks in the broadband business.
According to its IPO draft offer document, Bharti Tele-Ventures net loss in
the past year to March more than doubled to Rs 1.04 billion, reflecting heavy
spending to build out its communications network. But revenue too nearly doubled
to Rs 8.48 billion, and the company earned an operating profit of Rs 1.79
billion.
The buzz
Bharti Tele-Ventures is well placed to thrive in India's fast-growing mobile
phone market, according to several recent brokerage recent reports. Bharti swept
the government auction earlier this year of new mobile licenses, winning eight
out of 11 licenses it bid for. Deutsche Bank in October estimated the size of
the Indian mobile phone market at $760 million for the current year to March.
The technology research firm Gartner in August said it expected India's
cellular market to grow at compound annual rate of 52.5 per cent through 2005,
double China's 26 per cent growth rate. Gartner forecast India's mobile market
to grow to 30.9 million subscribers by 2005, up six-fold from 4.5 million now.
"By 2005, India will join the big league. By 2006, it will be among the top
three mobile markets in Asia after China and Japan," Bertrand Bisaud,
Gartner's director for Asia-Pacific telecommunications, said at the time.
The competition
In October, Deutsche Bank issued a 215-page research report forecasting the
Indian mobile phone market would consolidate around three companies -- Bharti,
Birla-AT&T-TATA-BP and Hutchison. That report said the number of mobile
phone subscribers in India will increase more than 14 fold to 60 million by
2010. But it also predicted average revenue per user will drop sharply, making
the market less appealing than often portrayed.
Bharti, it noted, is one of few Indian telecom companies with the cash to
fund ambitious growth plans and acquisitions. Bharti has received over $1
billion in funding in the past year from a clutch of investors including
Singapore Telecom, E.M. Warburg Pincus, the International Finance Corp and New
York Life.
Hutchison Telecommunications Group is the Indian subsidiary of Hong
Kong-based Hutchison Whampoa Ltd. The other company mentioned as likely to lead
the consolidation process is the entity to be formed by the merger announced in
June between BPL Communications and Birla-AT&T-Tata.
Birla-AT&T-Tata is a joint venture between the US telecoms giant AT&T
and two of India's biggest conglomerates, the Tata and Birla groups. BPL
Communications is unlisted. When the merger is completed, Birla-AT&T-TATA-BPL
will overtake Hutchison Telecom as the largest company in India's cellular phone
market.