The Bharti Hexacom IPO, valued at Rs 4,275.00 crores, is a book built issue comprising solely of an offer for sale of 7.5 crore shares. Opening for subscription on April 3, 2024, it will conclude on April 5, 2024, with the allotment expected to be finalized on Monday, April 8, 2024. Bharti Hexacom IPO is scheduled to list on both the BSE and NSE, tentatively set for Friday, April 12, 2024.

The IPO's price band is fixed at ₹542 to ₹570 per share, with a minimum lot size for application set at 26 shares. Retail investors need a minimum investment of ₹14,820. For sNII, the minimum lot size investment is 14 lots (364 shares), totaling ₹207,480, while for bNII, it is 68 lots (1,768 shares), amounting to ₹1,007,760.

SBI Capital Markets Limited, Axis Capital Limited, Bob Capital Markets Limited, ICICI Securities Limited, and IIFL Securities Ltd serve as the book running lead managers for the Bharti Hexacom IPO, while Kfin Technologies Limited is the designated registrar for the issue.

Refer RHP (Red Herring Prospectus) & DRHP (Draft Red Herring Prospectus) for more details.

The objective of the issue is to provide liquidity to the existing investors.

The issue includes the offer for sale of up to 75,000,000 Equity Shares priced at Rs. 570/- per share helping the company to raise Rs. 4275 Cr.

The issue will also help in enhancing brand visibility and liquidity to the investors.

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About Bharti Hexacom Limited

A communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the Northeast (Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura) telecommunication circles in India. The company works under the brand ‘Airtel’ with a strategy to premiumise its portfolio by acquiring and retaining quality customers. It was originally incorporated in 1995 as ‘Hexacom India Limited’. In 2004, the name Company changed to ‘Bharti Hexacom Limited’ when Airtel acquired a majority equity interest owning 70% share.

The company holds 1^st position in the North-East circle & for the Rajasthan circle, the gap between the market leader and Bharti Hexacom Limited has narrowed, standing at a close second position. As of Dec’ 23, the company is present in 486 census towns and had an aggregate of 27.1 million customers across both the circles. The company had an extensive distribution and service network comprised 616 distributors and 89,454 retail touchpoints with 51 retail outlets and 24 small format stores to reach 90 cities.

It undertakes prudent cost optimization measures to improve profitability with efficient capital structure. The company continuously invests in network expansion, technology advancement and judicious spectrum investments. They had invested ₹ 206 billion in capital expenditure in future ready digital infrastructure. Deriving synergies from Airtel, through the expansive digital infrastructure, digital experience and the digital services it provides to its customers.

India is the second largest telecom market globally, with 1,143.9 million wireless customers in FY23, behind China with 1,781 million wireless customers in 2022. The number of wireless telecom customers in India increased at a CAGR of 2.6% between FY14 - FY23 to 1,143.9 million. In FY23, at 82.5 customers per 100 people, India’s wireless tele density is the lowest among the top five wireless markets in the world as well as among emerging markets.

The under-penetration of telecom services implies potential for growth, especially in rural areas, urban areas, data consumption beyond mobility is driven by an increase in connected home devices, connected automobiles and other Internet of things (IoT) applications, further supporting both wireless and wireline broadband customers.

Rajasthan had 67 million telecom customers contributing 5.6% to overall India telecom customers, with teledensity of 79.5% as of FY 2023, which lags the national average of 84.5% due to its lower rural teledensity of 57.2%. Rajasthan’s customer base is expected to grow at 1.4% to 1.5% between Fiscals 2023 and 2028 reaching 69.0 million to 69.5 million with a teledensity of 82% to 83% following pan-India trends with rising rural teledensity. Wireless customers are expected to account for approximately 98.5% of the customers by Fiscal 2028.

while the Northeast had 12.7 million customers, contributing 1.1% to overall India telecom customers. Circle had a teledensity of 79.7% as of Fiscal 2023 with a majority of its telecom customers being wireless due to the limited penetration of wireline services on account of challenges in laying and maintaining wireline infrastructure given the region’s hilly terrain and extreme weather conditions.

The customer base in the North-East is expected to grow at 1% to 1.5% between FY23 - FY28 reaching 13.2 to 13.5 million with a teledensity of 81 to 82%. Wireless customers are expected to account for approximately 98% of the customers as of Fiscal 2028. Northeast circle telecom industry is expected to grow at 6% to 7% between Fiscals 2023 and 2028 to reach ₹ 39 to 41 billion, supported by rising teledensity, higher internet penetration and a potential increase in ARPU in the region.

These two regions are expected to see improvement in teledensity and adoption of smartphones in rural areas through investments in network infrastructure along with factors including the growth of digital payments indicating strong growth potential for telecom and data services, rise in data consumption and growth in demand for e-education.

Risk Factors associated to the issue:

Provide services in Rajasthan and the North East circle only: Any unfavourable developments in such regions could adversely affect business, results of operations and financial condition. Company may have operations across multiple circles, resulting in increased scope for growth and customer addition. Any changes in customer preferences can effect.

Reduction in revenue from telecom services: Due to regulatory ceilings on pricing, or owing to pricing pressure, reduction in average revenue per user ("ARPU"), may have an adverse effect on business, financial condition, results of operations and prospects.

The company have incurred indebtedness: As of December 31, 2023, company had total outstanding borrowings of ₹37,719.55 million, they must service this debt and comply with any lenders' covenants to avoid defaulting on borrowings and refinancing risk.

Major infrastructure is not owned by company: The company relies on third party providers for such infrastructure. As of December 31, 2023, it utilized 24,874 network towers, of which it owned 5,092 towers, and the remaining 19,782 towers were leased from Indus Towers and other tower companies.

Churn rate in the mobile telecommunications industry in India is high: Factors such as SIM consolidation, closure of inactive SIMs, and ease of number portability among others, contribute to a high churn rate for the industry. This makes it necessary for the telecom players to offer competitive tariffs, introduce promotional offerings and maintain service quality to retain customers.

Intense competition affecting profits, poor quality of network, including redundancies and disaster recoveries, can adversely affect business.