In a move that the Bharti Group claims it is unaware of, Mauritius-based Tuscany TMT Investments is buying stake in Bharti Telecom—the holding company of Bharti Airtel—and Bharti Teletech—the telecom equipment manufacturing arm of the group—from a private company.
Tuscany has sought permission from the Foreign Investment Promotion Board (FIPB) for the transactions. A Bharti spokesperson said the group will seek clarification about the transactions from the government departments concerned.
“Bharti Teletech and Bharti Telecom are privately-held companies. The companies and promoters are not selling stake in any of these firms. We will seek clarification from the department concerned,” the Bharti spokesperson said. Sources in the Bharti Group said the company will seek details regarding the identity of both the seller and buyer.
Tuscany is picking up 0.63% stake in Bharti Teletech and 0.3% in Bharti Telecom—both from securities firm Yatish Trading. Last week, Tuscany filed separate applications with FIPB, seeking approval for its equity stake in the Bharti Group companies. The ownership pattern of Tuscany could not be ascertained.
Bharti Telecom holds 45.32% in Bharti Airtel, India’s largest private telecom company with a market cap of about $50 billion. Bharti Teletech is the largest telephone equipment manufacturing company in India and the largest in the world outside China.
It manufactures landline phones, telephone equipment, modems and set-top boxes, among others. As per information available with ET, Tuscany is buying 54,000 shares in Bharti Telecom at $20 per share. A 0.3% stake in Bharti Telecom translates into a 0.14% stake in Bharti Airtel. At current market cap, this translates to about $75 million.
However, the transaction price is just over $1 million. This may be because Bharti Telecom stocks are no longer traded, and as the promoter family and Singtel are major shareholders in the company, it is not possible for an individual investor to encash his indirect holding in Bharti Airtel on his own.
The promoter family, through Bharti Enterprises, owns over 70% in Bharti Telecom while Singtel owns about 26%. About 2% stake in Bharti Telecom is held by minority shareholders—close to 4,400 minority shareholders owned 395,262 shares, the company said on August 29, 2006.
Bharti Telecom was delisted in October 1999 from the Bombay Stock Exchange following an open tender at Rs 95/share by the management. Tuscany is also buying 32,070 shares in Bharti Teletech at $10 per share, which values the transaction at $320,700. At this price, the valuation of Bharti Teletech works out to be just under $51 million.
Source: Economic Times