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Bharti Tele could be India's largest IPO ever

Bharti Tele-Ventures Ltd, a major Indian telecommunications company, could raise as much as Rs 18.5 billion through its impending initial public offer, making it the largest IPO ever in the country, analysts said on Friday.

Some analysts estimate the company could get up to Rs 100 a share for the 185 million shares on offer. Others, though, estimated it would do well to get half that much.

The company has not yet set the price. It plans to do so after surveying how many shares institutions, brokerages and private investors are keen to buy and at what price.

"Market conditions are tough, but with the company's strong standing in the market, it could get up to Rs 100 for its shares," said an analyst at a domestic brokerage.

Another analyst, who spoke on condition of anonymity, estimated the likely range at only Rs 40-50 a share, citing concerns over Bharti Tele-Ventures huge losses and the threat from competition and lower tariffs.

The company expects to complete the IPO by early 2002.

Bharti Tele-Ventures is one of the main holding companies of unlisted Bharti Enterprises. Over the past year it has emerged as one of the strongest competitors in the fast-changing and rapidly growing Indian telecommunications market.

It runs four wholly owned subsidiaries -- Bharti Cellular in the mobile phone business, Bharti Telenet in the access business, Bharti Telesonic in the long-distance business and Bharti Broadband Networks in the broadband business.

According to its IPO draft offer document, Bharti Tele-Ventures net loss in the past year to March more than doubled to Rs 1.04 billion, reflecting heavy spending to build out its communications network.

But revenue too nearly doubled to Rs 8.48 billion, and the company earned an operating profit of Rs 1.79 billion.

THE BUZZ

Bharti Tele-Ventures is well placed to thrive in India's fast-growing mobile phone market, according to several recent brokerage reports.

Bharti swept the government auction earlier this year of new mobile licences, winning eight out of 11 licences it bid for.

Deutsche Bank in October estimated the size of the Indian mobile phone market at $760 million for the current year to March.

The technology research firm Gartner in August said it expected India's cellular market to grow at compound annual rate of 52.5 per cent through 2005, double China's 26 per cent growth rate.

Gartner forecast India's mobile market to grow to 30.9 million subscribers by 2005, up six-fold from 4.5 million now.

"By 2005, India will join the big league. By 2006, it will be among the top three mobile markets in Asia after China and Japan," Bertrand Bisaud, Gartner's director for Asia-Pacific telecommunications, said at the time.

THE COMPETITION

In October, Deutsche Bank issued a 215-page research report forecasting the Indian mobile phone market would consolidate around three companies -- Bharti, Birla-AT&T-TATA-BP and Hutchison.

That report said the number of mobile phone subscribers in India will increase more than 14 fold to 60 million by 2010. But it also predicted average revenue per user will drop sharply, making the market less appealing than often portrayed.

Bharti, it noted, is one of the few Indian telecom companies with the cash to fund ambitious growth plans and acquisitions.

Bharti has received over $1 billion in funding in the past year from a clutch of investors including Singapore Telecom, E M Warburg Pincus, the International Finance Corp and New York Life.

Hutchison Telecommunications Group is the Indian subsidiary of Hong Kong-based Hutchison Whampoa Ltd.

The other company mentioned as likely to lead the consolidation process is the entity to be formed by the merger announced in June between BPL Communications and Birla-AT&T-Tata.

Birla-AT&T-Tata is a joint venture between US telecoms giant AT&T and two of India's biggest conglomerates, the Tata and Birla groups. BPL Communications is unlisted.

When the merger is completed, Birla-AT&T-TATA-BPL will overtake Hutchison Telecom as the largest company in India's cellular phone market.

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