Big telecom mergers on cards: Mittal  ( August '14,2004, HBL)

THE Indian telecom sector, which is growing at nearly 100 per cent per annum, is projected to close at about 55-60 million subscribers this fiscal and is on course to touch the magical number of 200 million in about 5 years. The scene is now set for a "big bang merger."

The Chairman and Group Managing Director, Bharti Enterprises, Mr Sunil Bharti Mittal, said that the Indian telecom sector, which had about 20 players, had now about 6 major players. "We expect to see further consolidation, possibly through big mergers."

Mr Mittal, who was in Hyderabad to commission a customer care centre, said the Government's commitment to hike FDI to 74 per cent would have greater impact on the sector. The foreign funds that would come in could be deployed in other sectors craving for investments.

"If the Government were keen to have adequate measures to control, they could possibly have a `golden share' concept built onto the system," he said.

"Bharti is in the process of finalising plans for the proposed ADR issue offering about 200 million shares, which at the current price of about $3.5 per share could raise about $700 million. The ADR issue, which was approved by the board of directors late last month, will be taken up at the AGM this month. This will give us the power to offer the ADRs. We will decide later on when to offer ADRs. The ADR offer is aimed at giving the investors the option to trade in the US and also provide the company greater visibility in the US," Mr Mittal said.

He said, "Two Bharti circles (Delhi and Punjab) have over one million cellular connections and we expect Andhra Pradesh and Karnataka to join this one million club shortly. Given the current pace of growth, particularly in the rural and mofussil areas, we see the possibility of India moving to a subscriber base of about 200 million in about five years from the present 40 million. For instance, we have doubled the subscriber base in one year if you look at the total base of last seven years. We expect this trend to continue."

On Warburg Pincus shedding stake, Mr Mittal said, "Foreign shareholders must divest from time to time, to have the flexibility to park their funds in companies of choice. I learnt that Warburg Pincus has downloaded about 3-4 per cent share in the market. In fact, they were amongst the most committed investors who had been with the company for so long even when the shares had dipped significantly."

Earlier in the day, Bharti Tele-Ventures Ltd had informed the NSE about the sale of 6,20,00,000 equity shares constituting 3.35 per cent of the total paid-up capital of the company by Brentwood Investment Holdings Ltd, a unit of New York-based Warburg Pincus. Subsequent to the sale , Brentwood Investment Holdings Ltd holds 28,12,15,268 equity shares equivalent to 15.17 per cent of the total paid-up capital of BTVL.