Shareholders baulk at offer for Bharti shares.
Minority shareholders of Bharti Telecom Ltd, the unlisted holding company of India’s largest mobile phone services firm Bharti Airtel Ltd, have received at least three separate offers from brokerages in the past three weeks to buy their shares. Bharti Airtel is the country’s third most valuable company by market capitalization.
The offers, all made at a fraction of the price at which Bharti Telecom shares were nominally valued in previous deals between group promoter, the New Delhi-based Mittal family, and other investors, are being made at the behest of the company management, claim some of the minority shareholders.
Both the Bharti group as well as the brokerages seeking to buy the shares deny that Bharti is behind the effort to mop up the shares.
Bharti group is led by Sunil Mittal, who is also the president of trade group CII, or the Confederation of Indian Industry.
Flagship brand: An Airtel store. Bharti Telecom owns a little less than half of Bharti Airtel, India’s largest cellular services company.Shares of Bharti Telecom, which owns a little less than half of Bharti Airtel, the phone firm that counts some 50 million among its customers, were delisted in October 1999 from the Bombay Stock Exchange (BSE) after an open tender by the company management at Rs95 a share, a price that was increased by a rupee subsequently.
The Bharti group’s apex holding firm, Bharti Enterprises Ltd, and other affiliates hold more than 70% in Bharti Telecom as per the shareholding pattern on 31 December 2006. Pastel Ltd, a unit of Singapore Telecommunications Ltd, held more than 26% in Bharti Telecom at that time.
Meanwhile, a few thousand shareholders did not participate in the 1999 buyback offer. Around 4,400 of them still hold 395,262 shares, equivalent to a 1.98% stake in Bharti Telecom, according to a note issued by the company to its shareholders on 29 August 2006. Mint couldn’t independently ascertain if that number has since changed.
With Bharti Airtel’s rapidly rising market capitalization at around Rs1.98 trillion—its shares closed on Tuesday on BSE at Rs1,046 a share, a 52-week high—Bharti Telecom’s 45.33% stake in the largest Indian mobile phone service provider is valued at Rs89,722 crore. The number of outstanding Bharti Telecom shares, after converting some debt into equity in the current fiscal, is 21.77 million, valuing each nominally at Rs41,213 on Tuesday.
But brokerages have recently begun offering between Rs2,000 and Rs3,700 for each Bharti Telecom share, according to seven different minority shareholders interviewed by Mint. Minority shareholders received a letter dated 19 September from Bharat Bhushan Share & Stock Brokers Ltd’s accounts manager, Satish Agarwal, offering to buy back the shares at Rs2,000 apiece.
Zerodha (Trading & Demat Account)
RHP
