The Hindu Business Line : Bharti to merge cell subsidiaries

IN yet another significant attempt to consolidate its position in the telecom market, Bharti Televentures Ltd is proposing to amalgamate all its five subsidiaries for mobile service operations - Bharti Cellular Ltd, Bharti Mobinet Ltd, Bharti Mobitel Ltd, Bharti Mobile Ltd and Bharti Telenet Ltd - into one single entity.

According to industry sources, the company has filed an application with the Delhi High Court, to convene and hold a meeting of shareholders and creditors to seek permission for this move.

In return, the court, in its order, has directed it to hold the meeting in the last week of April.

This is the second such exercise being taken by the company. Earlier, it had announced the intention to merge its subsidiaries in fixed-line services, long-distance services and broadband services into one single entity, Bharti Infotel Ltd. The meeting of its shareholders and creditors for seeking permission has also been fixed for the last week of April.

Under the new scheme of arrangement, there will now be primarily two companies - Bharti Infotel and Bharti Cellular Ltd - post the amalgamation exercise, with the holding company continuing to remain Bharti Televentures Ltd.

The sources noted that the mega-amalgamation exercise, if completed, would mean that all contracts, deeds, bonds, agreements, schemes, arrangements, licences including those relating to trademarks, patents and copyrights will be shifted to the transferees.

It would also mean consolidation of staff strength, also giving the company opportunity to cut on staff strength and thereby minimise expenses on salaries.

The debt-raising capacity of the company will increase and the company will be in a better position to accumulate debts from the market.

Also, as far as the cellular operations are concerned, the amalgamation would mean that Bharti Mobile, Bharti Mobinet, Bharti Mobitel and Bharti Telenet's losses from the mobile operations will move to Bharti Cellular Ltd, the only subsidiary having operating profits. This will help it to claim more tax exemptions.

To top it, the overall amalgamation exercise will enable the company to cross subsidise the various services more efficiently and emerge as a truly integrated telecom player.

It is expected to allow for greater synergy and business planning, with the restructuring of the businesses also including re-allocation of product or business stream realignments within the company.

However, they noted that the merger of the mobile subsidiaries could face resistance from DSS Enterprises, which holds 4.67 per cent stake in Bharti Mobinet Ltd.

The remaining companies are all wholly-owned subsidiaries of Bharti Televentures.

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