Bharti Tele IPO lists!

The much expected Bharti Televentures Limited (BTL) share got listed on the bourses today. In line with expectations, the scrip opened higher but witnessed selling pressure. As a result, the premium to the offer price has narrowed. The offer was made through a 100% book-building route at a price of Rs 45 per share i.e. Rs 10 face value with a premium of Rs 35 per share. The size of the issue was around Rs 8,300 m. Against the offer price of Rs 45 per share, the scrip opened at Rs 52, implying a premium of 15% to the offer price. After falling to Rs 44, the scrip has recovered marginally and is trading at Rs 46 per share. The weighted average price is around Rs 47 with volumes of 7 m.

About the company...
BTL is one the India's leading private sector telecommunication service provider with presence in various segments of the industry viz. cellular, basic telephony, VSAT and Internet services. The cumulative subscriber base of the company as of September 30, 2001 was 1.3 m, consisting of 983,000 cellular, 128,000 fixed-line and 164,000 Internet subscribers. Total revenues for FY01 was Rs 8.5 bn with cellular division contributing to as high as 87% of revenues.

The company provides cellular services in six of the 22 license areas in India and intends to expand its service in nine circles by the middle of next year. The six license circles are Delhi, Karnataka, Andhra Pradesh, Himachal Pradesh, Chennai and Kolkata. It is also in the process of developing cellular networks in 9 other circles like Mumbai, Maharashtra, Gujarat, Tamil Nadu, Kerala, Uttar Pradesh, Madhya Pradesh, Haryana and Punjab. These circles together accounted for 92% of India's subscriber base as of September 30, 2001.

Currently BTL provides basic services in Madhya Pradesh and plans to extend it to four other circles viz. Delhi, Haryana, Karnataka and Tamil Nadu. Revenues from fixed line operations represents around 13% of BTL's total revenues. The company recently received the carrier access code for providing DLD services and has commenced operations. Besides, BTL has laid around 3,500 kilometers of fibre optic network in the state of Madhya Pradesh.

Concerns...
One of the key concerns is the management's past attitude towards minority shareholders. The company opted for de-listing from the stock markets in 1999 in light of a possible takeover attempt. In return, BTL came out with an open offer and subsequently de-listed the company.

Besides, BTL incurred a loss of Rs 1,043 m for FY01 as compared to Rs 454 m in FY00. The consolidated accumulated losses for BTL was Rs 2,046 m. Given the expansion plans of the company, BTL is expected to incur losses in the coming years as well in light of the capital-intensive nature of the business. Even though growth prospects are promising, its large capital base would also dilute earnings.