Bharti group plans southern spread

The Delhi-based Bharti group, which has a substantial presence in the telecom services business in northern India, is now spreading its tentacles into south India. The group, which is owned by the Mittals, intends to have a big presence in both the cellular and basic telephone services in the southern states.

The group has adopted the acquisition route to expand. It is acquiring stakes in running companies with licences for this region. It has now become a "strategic partner" of JT Mobile, the cellular licensee for Karnataka and Andhra Pradesh, by acquiring S.C. Cellular, a Sanmar group company that has an 18 per cent stake in JT Mobile. It is also in talks with the Delhi-based Thapar group to buy its stake in Skycell, the Chennai cellular venture.

Once these acquisitions are complete, the Bharti group will have a footprint extending from Delhi to Chennai through Himachal Pradesh, Madhya Pradesh, Andhra Pradesh and Karnataka. That will make it the largest private telecom group in India with a presence both in cellular and basic telephone service sectors.

JT Mobile is promoted by the Sanmar group, which has a 20 per cent stake in the company, Telia of Sweden (26 per cent), United Telecom (31 per cent) and Jasmine and TOT of Thailand (23 per cent). In order to accommodate Bharti Enterprises, Sanmar group, United Telecom and Jasmine and TOT will restructure their respective holdings. Telia's holding is expected to be left intact.

Under the agreement, the Bharti group will invest Rs 400 crore in the venture to strengthen its infrastructure and expand its services in the two circles. This will supplement an investment of Rs 600 crore already made by JT Mobile. With these funds coming in, JT Mobile has cleared its dues to the department of telecommunications, the deadline for the payment of which was 30 November 1999.

It is not certain yet how the group will relate with other investors in JT Mobile. Observers believe that it will try to wrest control of the company by acquiring a majority stake so that the southern company's plans dovetail with the Bharti group's long-term strategy.

With the announcement of infusion of funds by the Bharti group, Jasmine and TOT have already decided to exit the venture as they are not in a position to bring in matching funds. This clearly paves the way for the group to buy out their stakes. The promoters are understood to have agreed to give Bharti operational control of the company at the moment. Bharti has a successful track record elsewhere in the country.

The Thapar group owns 40.5 per cent of Skycell's equity, and DSS Pvt Ltd 10.5 per cent. The rest is held equally by Bell South of the US and Millicom of Luxembourg. Skycell has already completed the five-year lock-in period stipulated by the licence agreement, which means it is a feasible target for acquisition.