Bharti Tele-Ventures has struck a deal with Shyam Telecom to buy out the latter's 67.5 per cent stake in cellular services company Hexacom for Rs 430 crore. Hexacom offers cellular services in Rajasthan and controls 44 per cent of the cellular market in the state with a subscriber base of 250,000. In a share swap deal, Bharti has proposed to issue optionally convertible redeemable debentures to Shyam Telecom for their 67.5 per cent holding in Hexacom. The Rs 430 crore deal comprises Rs 300 crore as optionally convertible redeemable debentures, Rs 75 crore worth equity shares of Bharti Tele-Ventures, and Rs 55 crore in cash. This is Bharti's second attempt to gain a foothold in Hexacom. Bharti's earlier offer to pick a 27.5 per cent stake in Hexacom held by Canada-based Telesystem International Wireless Inc for Rs 102 crore in December 2003, was shot down by Shyam Telecom which exercised its first right of refusal. Instead, Shyam Telecom decided to buy out Telesystem International Wireless' stake increasing its holding in the company to 67.5 per cent. Other than Telecommunications Consultants India Ltd, financial investors hold a 2.5 per cent share in the company. The latest agreement with Shyam Telecom is subject to a first right of refusal resting with Telecommunications Consultants India Ltd, which holds 30 per cent in Hexacom. The agreement will also enable Bharti to tap the Northeast market, for which Hexacom holds a licence. With the proposed acquisition, Bharti's cellular footprint will cover 16 circles with a subscriber base of over 6 million. Bharti is also rolling out its unified licence in five other circles. Reliance continues to top the chart with a subscriber base of over 6.4 million. BSNL, with a subscriber base of about 5 million, however, has the largest footprint spanning 22 circles. For Shyam Telecom, the deal signals its exit from the GSM-based cellular market. "The company has decided to focus on Rainbow, its 100 per cent subsidiary, offering fixedline services." said a statement issued by Shyam Telecom after its board meeting yesterday. However, since the company has converted its basic licence to a unified licence, Shyam Telecom may return to Rajasthan with mobile services employing CDMA technology. Going by the value offered by Bharti to Telesystem International Wireless earlier, the Sunil Mittal-controlled company should have acquired a 67 per cent stake for around Rs 248 crore. Bharti executives said, "The said consideration includes a premium for majority shareholding and majority on the board of directors. The advantage of acquiring a controlling stake in Hexacom as compared with investing in a greenfield project was also a consideration." Bharti executives said since Hexacom was offering services on the more efficient 900 Mhz frequency, it would have required higher investments by Bharti to set up a new mobile network running on 1,800 Mhz allocated to new operators. Bharti is expected to pick up Telecommunications Consultants India Ltd's share as well, once the public sector company gets the nod from the disinvestment ministry to offload its 30 per cent stake in Hexacom. Mittal's other acquisitions
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Bharti strikes Hexacom deal for Rs 430 crore
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First Published: Apr 06 2004 | 12:00 AM IST
