India IPO: Investors hungry for Bharti Hexacom stock

• Bharti Hexacom, a regional service provider in India that is majority-owned by Bharti Airtel, is listing some its shares via an IPO process 
• Investor interest in the available stock was high, signalling strong interest in India’s telecom sector 
• The service provider’s expected listing date is 12 April at the latest

Investor interest in the initial public offering (IPO) of Bharti Hexacom, a subsidiary of Bharti Airtel, has been strong and has provided insights into Bharti Hexacom’s market positioning as well as shareholder interest in India’s telecom sector. 

Bharti Hexacom operates in the Rajasthan and north-east circles (service areas), offering mobile (with a commitment to offer 5G) and fixed line services. It has about 27 million customers and is the dominant service provider in the region. 

Its fixed services focus particularly on the provision of broadband services where, according to an IPO note from AUM Capital, it has been performing well in areas with notably low wireline internet penetration compared to the national figures: Bharti Hexacom grew its fixed line voice and broadband customer base from 70,000 customers as of 31 March 2021, to approximately 289,000 by 31 March 2023. With regards to its mobile services, it boasts significant spectrum holdings, none of which expire before 2030, the AUM Capital analysts noted.

The operator is currently 70% owned by Bharti Airtel and 30% owned by government-owned Telecommunications Consultants India (TCI). With the backing of Bharti Airtel, the company is able to leverage its parent company’s strong brand recognition and operational expertise to bolster its competitive position. It is TCI that is making 75 million shares (half of its holding) available to the market via the IPO, which is valued at 47.5bn rupees: The proceeds will go to TCI and not to Hexacom. 

The subscription process for the IPO, during which investors signal their interest in the available stock, concluded on 5 April and ended with a subscription rate of almost 30 times the available volume of shares, indicating strong investor interest, particularly from institutional buyers. The allocation process, identifying which investors have been successful in their applications, was due to be completed today (8 April), with the stock set to be traded on the public stock market by 12 April. 

The enthusiastic response to the offer suggests strong faith in the telecom service sector’s potential for growth, and financial analysts have acknowledged Bharti Hexacom’s solid market standing and the reasonable valuation of its IPO relative to industry peers. 

Bharti Hexacom’s IPO comes just as another of India’s service providers, Vodafone Idea, seeks to raise capital to fund its 5G rollout: Its board has approved a plan to raise fresh funds from one of its main shareholders, Aditya Birla Group. 

- Joana Bagano, Contributing Editor, TelecomTV