BANGALORE: Crompton Greaves is in the advanced stage of negotiations with
Bharti Enterprises to sell its 40.1 per cent equity stake in Chennai cellular
service provider SkyCell Communications for around Rs 255 crore.
Sources said Bharti, which runs cellular and basic services under the Airtel
brandname in Delhi, HP and Madhya Pradesh, is close to clinching the deal.
Bharti Enterprises chairman Sunil Mittal confirmed that talks were on. Bharti's
bid ties in neatly with its plans to expand its cellular operations in the
country.
These include ratification of the new telecom policy by the Lok Sabha, which
is now expected to go through smoothly following return of the Vajpayee
government. Another issue which is to be settled is the percentage of revenue
sharing. Sources close to Crompton Greaves management said deal would be inked
soon. Bharti has edged out other contenders like Escotel and BPL Telecom,
according to sources.
The deal, once through, would leave Crompton Greaves with a net gain of over
Rs 225 crore. Crompton Greaves had spent about Rs 25.20 crore in the project at
the time of its commissioning in 1994. The cash inflow would help Crompton
Greaves retire part of its high cost debt. The secured and unsecured debt as on
March 1999 stood at Rs 513.06 crore and Rs 155.62 crore. The company has been
paying high interest cost and the saving by repaying the debt will directly add
to its bottomline and eventually boost its earning per share.