Calling suitors: Rabo to play match-maker for HFCL Infotel

Neeraj Jha in Mumbai

Himachal Futuristic Communications Limited (HFCL) has awarded Rabo India the mandate to find a strategic partner for HFCL Infotel, its subsidiary which operates basic telephony service in Punjab. Merchant banking sources said that the company had appointed Rabo India as the merchant banker “two-three weeks back.” This may well mean curtains for Arthur Andersen which had the mandate earlier.

When contacted, CK Goushal, advisor, finance, HFCL, confirmed the development, but said it was not a formal appointment. “Rabo India expressed their willingness to find a partner for us. We agreed. We haven’t heard anything from Arthur Anderson,” he said. Mr Aditya Sanghi, director, M&A, Rabo India when contacted did not say much. “ I will neither confirm nor deny the development. But had the company done anything, it would have informed the stock exchanges also.” HFCL, presumably, did not formally appoint Rabo India as that would have required HFCL, being a listed entity, to inform the stock exchanges.

HFCL, for months, has been looking out for a partner to off-load majority stake in HFCL Infotel, and keep a minority stake (not more than 10 per cent), for itself. The company has made it very clear that it wanted to remain in the joint venture as an investor and pass on management control to the new partner. As per the company’s unofficially laid down pre-conditions, the partner will also have to maintain a focus in cellular services besides buying equipment from HFCL.

Company officials were mum, investment bankers did not rule out a three-way merger among HFCL, Tata Teleservices and Hughes Tele.com. “A three-way merger will make a lot of sense for each one of them. Tatas may pump more money into it. On their own they will all die,” said a source. The company refused to comment on whether this was being looked at as a possibility. “There is no such proposal as yet,” HFCL sources said.

With reports of Tata Teleservices, the basic operator in Andhra Pradesh, looking to join hands with Hughes tele.com its counterpart in Maharashtra, the wave of consolidation seems to have already started.