The Bharti initial public offering (IPO) will open on January 28 and will be a litmus test for all telecom firms, according to top investment bankers here.
Bharti is expected to announce the date of the initial public offering (IPO) and the price per scrip on Wednesday.
The IPO will be keenly watched by telecom companies in the next few quarters. If it is successful, several other telecom companies are widely expected to float issues. They include Hutchison, the Birla-Tata-AT&T-BPL combine, Escotel and Reliance Infocom. They could be seeking either a domestic or overseas listing.
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K V Seshasayee, chairman of Fascel, the cellular operator in Gujarat, said the primary market could boom if the Bharti IPO is successful. The proposed float will put an end to the lull in the market.
Still, some cellular industry heads are not so sure whether they would be launching IPOs. "We want to list our shares in the market. But the uncertainties in the market place and that of the regulatory issues have to be resolved," said a top executive at a cellular firm.
Some financial institutions would like to pick up the Bharti share cheap, but won't buy it if the price is stiff. "We have already made some commitments to several of the group's projects in terms of debt. We would like to buy the share at a reasonable price. If we are unable to do so, the possibilities of picking up stakes in Bharti through its IPO are bleak," sources said.
Analysts said going by the IPO of Hughes Tele.com, the first private telecom services firm to be listed on the bourse, the Bharti Tele-Ventures share price may not appreciate substantially after the listing. Besides, the promoters have no immediate plan to offer dividends. "These factors could affect the IPO," they added.
Yet the silver lining for Bharti is that many foreign institutional investors have exited from several second-rung software companies in India in the wake of the global meltdown in technology stocks and are awaiting the right opportunity to buy good stocks. Besides, in the past few months, FIIs and retail investors have not yet got any major opportunity to pump funds into the equity through the IPO route.
Ever since cellular telephony took off, operators have been faced with several problems.
Overestimation of demand for cellular telephony and overestimation of average revenue per user (ARPU) made cellular operators offer high licence fees. For majority of the cellular operators, financial closure has not taken place due to lack of viability of the projects.
A number of cellular firms had last year deferred their IPO plans in the wake of the limited mobility issue and dismal primary market conditions fearing that the wireless in local loop (WiLL) will kill the valuation of their businesses.
The Centre had permitted basic operators to offer limited mobility services at economical rates, challenging the subscriber-base of cellular firms. The WiLL issue had also prompted some cellular firms to alter their acquisition plans. But in the recent past, the market is rife with some merger and acquisition moves, analysts said.
Though the Centre had allowed limited mobility, basic operators have not yet gone ahead in a big way as expected earlier. However, the Bharti group, the Tata group and Reliance Infocom are eyeing the market with huge investment plans.
Sebi clears allotment to customers
Our Bureau in Kolkata
The Securities and Exchange Board of India (Sebi) has cleared the last hurdle in Bharti Tele-Ventures' forthcoming IPO.
Sebi chairman D R Mehta said that the regulatory body has in-principle cleared Bharti's proposal for reserving a portion of the IPO for its customers.
Bharti joint managing director Akhil Gupta, however said, the company is yet to hear from its merchant bankers on the issue. "Once Sebi clears our proposal our merchant bankers will advise on the portion to be reserved for the purpose" he said.
The country's first telecom IPO is using the book building route to arrive at price of the shares. It is offering 185,336,700 equity shares out of which 111,202,020 are reserved for qualified institutional buyers, 27,800,505 will be the non-institutional portion and the retail portion would be 46,334,175 equity shares.