Bahrain Telecommunications Co. plans to sell most of its stake in its Indian joint venture, two people familiar with the matter said Wednesday, as it seeks to unlock value from its investment in one of the country's smallest telecom operators.
Batelco is looking to sell up to 30% of S Tel Pvt. Ltd. and has hired an investment bank to approach potential buyers, the people said. Batelco holds 42.7% of S Tel.
The planned deal comes at a time when Indian telecom operators, especially small players such as S Tel, are bleeding because of intense competition that has kept call tariffs low and due to high debt costs for expansion and acquiring bandwidth. Any sale would also help Batelco scale back its exposure to India, where the government is likely to announce new rules on mergers and acquisitions later this year, which could drive consolidation in the sector.
Batelco's group chief executive officer, Peter Kaliaropoulos, didn't confirm or deny plans for the stake sale. He said that Batelco is committed to the Indian telecom market, but "values the opportunities for growth that will be enhanced by future market consolidation in the industry."
"All options are being explored to ensure long-term growth of our investment" in India, he said in a statement, without elaborating.
An S Tel spokeswoman said that any stake sale by Batelco wasn't a matter involving the company, and that it wouldn't be aware of any such development.
The two people familiar with the matter said also that Batelco hasn't decided on a target timeline for the deal. They didn't specify the expected valuation that Batelco might seek.
Batelco's move to pare its stake is "motivated by its desire to unlock the value in its holding," one of the people said.
Batelco, along with a private-equity partner, bought 49% of S Tel for about $225 million in early 2009, a year after the local company got licenses to offer second-generation telephony services. Siva Group is the Indian joint venture partner.
Market leader Bharti Airtel Ltd., with more than 170 million users at the end of July across India's 22 service areas, is valued at $33.2 billion. S Tel had 3.5 million users as of July-end and operates in only six service areas. Among the other operators that received licenses at the same time as S Tel, Videocon Telecommunications Ltd. has about 7.0 million users while Unitech Wireless Ltd. has around 27.4 million subscribers.
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