BT gets out of Bharti

BT of the UK has finally sold its stake in Bharti Cellular.

In the latest move to quit its Asian investments, BT has sold its 44% stake in Delhi mobile phone company, Bharti Cellular.

It was thought from the outset that this would be a difficult sale. That’s because Bharti Cellular is part of the bigger Bharti empire which owns other telecoms assets. Moreover, the Bharti holding company was recently bought into by SingTel, and thus the chances of BT selling to another telco looked slim. After all, which strategic telecoms investor would want to buy in at a lower level, when SingTel already had a strategic stake at the top holding company level?

However, BT has managed to sell its stake to Bharti Televentures, and has thus made its exit via its erstwhile partner – a process most M&A bankers dread the most, as it leaves very little room to negotiate. But while the price was not disclosed, a BT source in London told FinanceAsia that it got รบ120 million ($168 million) for the stake, which is slightly above the amount of its initial investment.

On top of that, it is rumoured to have received $25 million from its earlier sales of its stakes in Bharti BT Internet and Bharti BT V-SAT. These were also sold to Bharti.

BT was advised on the sale by JPMorgan. Typical of many family businesses – and given its intimate knowledge of the assets – Bharti chose not to use an adviser.

BT has not, however, exited India completely. It retains its 43% stake in Mahindra BT, a software company of which BT is itself a major customer.

As for the rest of the region, the great BT telecoms car-boot sale still needs to be played out in Korea (where it has 18% of LG Telecom), Hong Kong (where it has 20% of Smartone) and Singapore (where it holds 18% of Starhub – although this will be diluted after Starhub merges with SCV).

Thus far BT – surprisingly enough – seems to be ‘in the money’ on the sale of its investments. Even if the sale of the remaining three assets does not go well, the fact that it made $1 billion from the sale of its stake in Japan Telecom to Vodafone, should ensure it remains ahead.

Meanwhile, Bharti, Hutchmax and BPL are all looking at merger possibilities in India. Bankers say the first of these to pair up is likely to dominate the Indian mobile scene going forward and marginalize the remaining players.