Bharti to buy 27.5% in Hexacom for Rs 102crore

Analysts expect Mittal to buy out TCIL, Shyam Telecom in JV

The Sunil Mittal-owned Bharti Tele-Ventures has decided to buy a 27.5 per cent stake in Hexacom India Ltd for Rs 102 crore ($22.5 million).

The stake was held by Telesystem (Mauritius) Pvt Ltd, a subsidiary of Telesystem International Wireless Inc, Canada (TIW).

Hexacom operates a GSM network in Rajasthan under the brand name Oasis and has a 48 per cent market share with over 200,000 customers.

The acquisition will enable Bharti to get a foothold in Rajasthan and take its nationwide cellular operation to 16 circles.

The deal is expected to be completed in two months subject to regulatory and shareholders' approval.

Industry sources pointed out that Bharti might eventually acquire Telecommunications Consultant of India Ltd (TCIL) and Shyam Telecom's stakes in Hexacom to take management control. TCIL has already moved a note to the communications ministry seeking approval for exiting Hexacom.

"It is unlikely that Bharti will have a minority stake in any venture. It is not a strategic investor but a long-term player," said a source close to the company.

Telecom analysts said the deal amount was justified. Kobita Desai, analyst, Gartner, said, "The deal amount may seem to be on the higher side compared to the investment required for taking a fresh licence. But when you look at the advantage that Bharti is going to derive from the acquisition, it is the right move. The company gets a readymade network with over 200,000 subscribers and a presence in Rajasthan overnight."

Other analysts said while Bharti had shelled out close to $410 per subscriber, an acquisition cost of up to $500 per subscriber was acceptable. They, however, pointed out that in a few recent cases, the buyer had paid only $250 per subscriber.