CHENNAI/KOCHI, FRIDAY, APRIL 5, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XLIV 282, 16 PAGES, `12.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E THIS IS A PUBLIC ANNOUNCEMENT FOR INFORMATION PURPOSES ONLY AND IS NOT A PROSPECTUS ANNOUNCEMENT AND DOES NOT CONSTITUTE AN INVITATION OR OFFER TO ACQUIRE, PURCHASE OR SUBSCRIBE TO SECURITIES. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY OUTSIDE INDIA. EQUITY SHARES OF OUR COMPANY WILL GET LISTED ON THE MAIN BOARD PLATFORM OF BSE LIMITED (“BSE”) AND NATIONAL STOCK EXCHANGE OF INDIA LIMITED (“NSE”, AND TOGETHER WITH BSE, THE “STOCK EXCHANGES”) IN COMPLIANCE WITH CHAPTER II OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED (“SEBI ICDR REGULATIONS”). BHARTI HEXACOM LIMITED (Please scan this QR Code to view the RHP) Our Company was originally incorporated under the Companies Act, 1956 as ‘Hexacom India Limited’, and was issued a certificate of incorporation on April 20, 1995 and subsequently, a certificate for commencement of business by the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on April 26, 1995. Subsequently, the name of our Company changed to ‘Bharti Hexacom Limited’, pursuant to a special resolution passed by our shareholders at its extraordinary general meeting held on September 10, 2004 and a fresh certificate of incorporation was issued by the Registrar of Companies, NCT of Delhi & Haryana at New Delhi on December 2, 2004. For details, see “History and Certain Corporate Matters” on page 216 of the red herring prospectus of our Company dated March 22, 2024 filed with the RoC (“RHP” or “Red Herring Prospectus”). Corporate Identity Number: U74899DL1995PLC067527; Website: www.bhartihexacom.in Registered Office and Corporate Office: Bharti Crescent, 1, Nelson Mandela Road, Vasant Kunj, Phase II, New Delhi 110 070, India Contact Person: Richa Gupta Rohatgi, Company Secretary and Compliance Officer; Telephone: 011-46666100, Email: bhartihexacom@bharti.in OUR PROMOTER: BHARTI AIRTEL LIMITED INITIAL PUBLIC OFFERING OF UP TO 75,000,000 EQUITY SHARES OF FACE VALUE OF ` 5 EACH (“EQUITY SHARES”) OF BHARTI HEXACOM LIMITED (THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] PER EQUITY SHARE (“OFFER PRICE”) AGGREGATING UP TO ` [●] MILLION (THE “OFFER”) COMPRISING AN OFFER FOR SALE OF UP TO 75,000,000 EQUITY SHARES AGGREGATING UP TO ` [●] MILLION BY TELECOMMUNICATIONS CONSULTANTS INDIA LIMITED (“SELLING SHAREHOLDER”) (THE “OFFER FOR SALE”). THE OFFER PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE BAND AND THE MINIMUM BID LOT WILL BE DECIDED BY OUR COMPANY, IN CONSULTATION WITH THE BRLMs, AND WILL BE ADVERTISED IN ALL EDITIONS OF THE ENGLISH NATIONAL DAILY NEWSPAPER FINANCIAL EXPRESS, ALL EDITIONS OF THE HINDI NATIONAL DAILY NEWSPAPER JANSATTA (HINDI ALSO BEING THE REGIONAL LANGUAGE OF NEW DELHI WHERE OUR REGISTERED OFFICE IS SITUATED), EACH WITH WIDE CIRCULATION, AT LEAST TWO WORKING DAYS PRIOR TO THE BID/OFFER OPENING DATE AND SHALL BE MADE AVAILABLE TO STOCK EXCHANGES FOR THE PURPOSE OF UPLOADING ON THEIR RESPECTIVE WEBSITES IN ACCORDANCE WITH THE SEBI ICDR REGULATIONS. DETAILS OF THE SELLING SHAREHOLDERS, OFFER FOR SALE AND WEIGHTED AVERAGE COST OF ACQUISITION PER EQUITY SHARE NAME OF THE SELLING SHAREHOLDER Telecommunications Consultants India Limited TYPE Selling Shareholder NUMBER OF EQUITY SHARES OFFERED/AMOUNT (IN ` MILLION) WEIGHTED AVERAGE COST OF ACQUISITION PER EQUITY* 7.08 Up to 75,000,000 Equity Shares aggregating up to ` [●] million *As certified by J. C. Bhalla & Co. Chartered Accountants by way of their certificate dated March 22, 2024. We are a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India, which comprises the states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura. We offer our services under the brand ‘Airtel’. The Offer is being made through the Book Building Process pursuant to Regulation 6(2) of the SEBI ICDR Regulations. QIB Portion: Not less than 75% of the Offer | Non-Institutional Portion: Not more than 15% of the Offer | Retail Portion: Not more than 10% of the Offer. PRICE BAND: `542 TO `570 PER EQUITY SHARE OF FACE VALUE OF `5 EACH. THE FLOOR PRICE IS 108.40 TIMES THE FACE VALUE OF THE EQUITY SHARES AND THE CAP PRICE IS 114 TIMES THE FACE VALUE OF THE EQUITY SHARES. THE PRICE TO EARNING RATIO AT THE FLOOR PRICE IS 49.36 TIMES AND AT THE CAP PRICE IS 51.91 TIMES. BIDS CAN BE MADE FOR A MINIMUM OF 26 EQUITY SHARES AND IN MULTIPLES OF 26 EQUITY SHARES THEREAFTER. IN MAKING AN INVESTMENT DECISION, POTENTIAL INVESTORS MUST ONLY RELY ON THE INFORMATION INCLUDED IN THE RED HERRING PROSPECTUS AND THE TERMS OF THE OFFER, INCLUDING THE RISKS INVOLVED AND NOT RELY ON ANY OTHER EXTERNAL SOURCES OF INFORMATION ABOUT THE OFFER AVAILABLE IN ANY MANNER. In accordance with the recommendation of the Independent Directors of our Company, pursuant to their resolution dated March 23, 2024, the above provided price band is justified based on quantitative factors/KPIs disclosed in the “Basis for Offer Price” section of the RHP vis-à-vis the weighted average cost of acquisition of primary and secondary transaction(s) disclosed in the “Basis for Offer Price” section on page 103 of the RHP. RISKS TO INVESTORS 1. Geographical Concentration Risk: We derive 100% of our revenues from providing 4. Offer for Sale: The Offer comprises an Offer for Sale by the Selling Shareholders. Our consumer mobile services, fixed-line telephone and broadband services to customers in Company will not receive any proceeds from the Offer for Sale. the Rajasthan and the North East Circle only and any unfavourable developments in such 5. Regulatory Ceilings: Reduction in revenue we earn for our telecom services, due to regions could adversely affect our business and financial condition. regulatory ceilings on pricing, or owing to pricing pressure, reduction in average revenue per user may have an adverse effect on our business, financial condition, results 2. We have incurred losses in FY 2021 amounting to ` (10,339) million and our net tangible of operations and prospects. Further, set forth below are details of our ARPU in the asset during three fiscal years is negative and accordingly the Offer shall be undertaken corresponding periods compared to players in the industry: (Source: CRISIL Report) under Regulation 6(2) of the SEBI ICDR Regulations. In the event our Company fails to allot at least 75% of the Offer to the qualified institutional buyers, the Offer shall fail and Fiscal Fiscal Fiscal 9M Fiscal 9M Fiscal Operators the same may have an adverse impact on the reputation of our Company. 2021 2022 2023 2023 2024 3. Contingent Liabilities: There are contingent liabilities on DoT matters, which include BSNL N.A. N.A. N.A. N.A. N.A. demand on account of levy of one-time spectrum charge of aggregating to `4,737 million, Bharti Airtel 145 178 193 193 208 of which our Company had recorded a charge of `160 million for Fiscal 2020 along with interest thereon till December 31, 2023, amounting to `721 million. The balance demand Bharti Hexacom (Airtel) 135 155 185 184 197 amount of `4,577 million has continued as contingent liability. Vodafone Idea1 107 124 135 135 145 In addition to the above point, the following table below sets forth our contingent 138 179 182 Reliance Jio2 168 178 liabilities as per Ind AS 37 – Provisions, Contingent Liabilities and Contingent Assets, as Note: ARPU numbers are for exit quarter of respective Fiscal years/as of the nine months. For example, Fiscal 2023 of December 31, 2023: Particulars As of December 31, 2023 (` million) (i) Taxes, duties and other demands (under adjudication/appeal/ dispute) - Service tax and GST 787 - Income tax 645 - Entry tax - DoT demands number is for the fourth quarter of Fiscal 2023 and 9M Fiscal 2024 number is for the third quarter of Fiscal 2024. Blended ARPU as reported by the player; may include wireless and wireline. 2 As reported by the company, may include revenue from wireline, broadband, FTTH and other telecom services. (Source: Company filings).. 1 1,194 If our ARPU decreases, owing to internal factors or as a result of industry trends, our profitability may be impacted. Any sustained decrease in ARPU without any tariff hikes, or failure to premiumize customers at existing tariff rates, could adversely affect our business, financial condition and results of operations. 21 6. Average Cost of Acquisition: The average cost of acquisition of Equity Shares by the Selling Shareholder may be less than the Offer Price. - Access Charges/Port Charges 65 - Others 41 The details of the average cost of acquisition of Equity Shares held by the Selling Shareholder are set out below: - Other miscellaneous demands (ii) Claims under legal cases including arbitration matters Total 2,753 Name of the Selling Shareholder Number of Equity Shares Average cost of held on a fully diluted acquisition per Equity basis Shares* (`) If our contingent liabilities materialize, these could have an adverse impact on our reserves and statement of profit and loss by `7,330 million. For further information of our Telecommunications Consultants contingent liabilities as at December 31, 2023 as per Ind AS 37, see “Restated Financial 150,000,000 7.08 India Limited Information – Note 20. Contingencies and commitments – (I) Contingent liabilities” on *As certified by J C Bhalla & Co. by way of their certificate dated March 22, 2024. page 300 of the RHP. We cannot assure you that we will not incur similar or increased levels of contingent liabilities in the future. If a significant portion of these liabilities 7. Capital Expenditure: We require significant capital to fund our capital expenditure and if we are unable to raise additional capital, our business, financial condition and results of materialize, it could have an adverse effect on our business, financial condition and operations could be adversely affected. results of operations. Continued on next page... CHENNAI/KOCHI