Financial Daily from THE HINDU group of publications
Monday, Jan 05, 2004
Info-Tech - Mergers & Acquisitions
TCIL likely to sell stake in Hexacom to Bharti Tele
New Delhi , Jan. 4
TELECOMMUNICATION Consultants India Ltd (TCIL) has firmed up plans to exit Hexacom (India) Ltd by selling its 30 per cent stake in the company to Bharti Tele-Venture Ltd.
According to official sources, while negotiations are still to be concluded, the transfer of stake would make Bharti the majority shareholder in the company that offers cellular services in the Rajasthan circle.
This comes close on the heels of Bharti's announcement to buy 27.5 per cent stake in Hexacom held by Telesystem International Wireless (TIW) of Canada.
Shyam Telecom Ltd controls the remaining 40 per cent stake while 2.5 per cent stake is held by financial institutions and other private investors.
The sources added that with Bharti agreeing to buy TIW's stake for Rs 102 crore, TCIL hopes to cash in on this opportunity too.
The public sector company also plans to garner Rs 300-400 crore from its proposed initial public offering (IPO) whereby it would be offering up to 25 per cent of its equity.
The proceeds from the stake sale in Hexacom and the IPO would be utilised towards equity participation in telecom projects overseas.
According to the sources, the company, a premier telecommunication consultancy and engineering company with a strong base in IT, also plans to sell its substantial stake in Tamil Nadu Telecommunications Ltd (TTL), Intelligent Communications Systems India Ltd (ICSIL), TCIL Bell South (TBL).
The company also has stake in overseas ventures, TCIL Saudi Co Ltd (TSCL), United Telecom Ltd (UTL) and TCIL Nigeria Co Ltd (TNCL).
The reasoning behind the decision is that the diverse business profile of TCIL exposes it to the high-risk high-growth cellular sector.
Wireless telephony requires an entirely different set of success factors from that in TCIL's core line of business.
Its rationale for investing in these businesses was to find additional revenue streams.
However, from a purely portfolio point of view these joint ventures may not add value to the company.
What is more, once it manages to get out of these ventures, the Government plans to sell up to 51 per cent of its equity to a strategic partner in line with the recommendations of the Disinvestment Commission.
TCIL, which started with Rs 10 lakh as seed capital from the Government, has a current net worth of Rs 380 crore.
The company has executed billing systems, e-governance projects, set up and operated GSM systems, optical fibre on power transmission lines, VSAT networks, radio trunking and other hi-tech telecom and IT projects.
Its turnover during 2002-03 was Rs 590 crore, which is expected to grow to Rs 1,250 crore by the year 2005.
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