Bharti Hexacom Eyes Market Expansion with SEBI-Approved IPO

Bharti Hexacom, a unit of telecom giant Bharti Airtel, has received the green light from the Securities and Exchange Board of India (SEBI) to raise funds through an Initial Public Offering (IPO). This development marks a significant step for Bharti Hexacom as it prepares to tap into the capital markets to bolster its financial standing and market presence.

IPO Details and Structure

The IPO by Bharti Hexacom, which will value the company at Rs 28,000 crore, is set to be an Offer for Sale (OFS), wherein 10 crore equity shares will be offloaded by Telecommunications Consultants India Ltd (TCIL), the public shareholder. This move represents 20% of the paid-up equity share capital of Bharti Hexacom. The expected IPO size will be Rs 4,300 crore.

Notably, the company will not issue any fresh equity shares, meaning that Bharti Hexacom itself will not receive any direct proceeds from the offering. The OFS format of this IPO implies that existing shareholders will sell their stakes, providing them with an exit or partial exit opportunity.

Bharti Hexacom operates in the telecommunications sector, providing a wide array of mobile, fixed-line, and broadband services in Rajasthan and the Northeastern regions of India. These services are offered under the Airtel brand. The company boasts a significant market share, particularly in Rajasthan, where it held a 40.3% revenue market share as of the end of September 2023. Consequently, Bharti Hexacom's focus on infrastructure investment, which amounted to Rs 20,300 crore as of the same period, underlines its commitment to enhancing service delivery and expanding its customer base.

Financial Outlook and Plans

The financial performance of Bharti Hexacom has shown promising trends, with the company reporting a net profit of ₹549 crore in the fiscal year 2023. The revenue from operations also witnessed a robust increase, rising by 22% to ₹6,719 crore. This financial upturn is indicative of the company's strong operational capabilities and its effective response to the dynamic demands of the telecommunications market. 

Concurrently, the market is keenly anticipating the launch of Bharti Hexacom's IPO, which is expected in the first week of April. Financial institutions, including SBI Capital Markets Ltd, Axis Capital, BOB Capital Markets, ICICI Securities, and IIFL Securities, have been appointed as the book-running lead managers for the issue. 

Looking forward, Bharti Hexacom aims to expand its 5G services coverage to all urban areas and selected rural pockets by March, signifying its dedication to technological advancement and superior customer service.

The approval from SEBI for Bharti Hexacom's IPO is not just a pivotal moment for the company but also represents a significant event for the Bharti Group, marking its first IPO in over a decade since the listing of Bharti Infratel (now Indus Towers) in 2012. The strategic decision to go public through an OFS allows Bharti Airtel and TCIL to monetize their investments in Bharti Hexacom while also providing the company with a platform to enhance its visibility and credibility in the market. The move is expected to have positive implications for Bharti Hexacom, enabling it to solidify its position further in the competitive telecommunications sector.