The disinvestment ministry is back - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

The disinvestment ministry is back

May 26, 2009

As per a leading business daily, the new government plans to revive the disinvestment ministry. It may be noted that the ministry was first formed under the NDA government but later converted into a department under the finance ministry when the UPA came to power in 2004. The main reason was the pressure from the left parties who were their major allies. This time around, there is no such pressure, although there might be opposition from the Trinamool Congress, an important ally. The government is likely to sell stakes in around 40 public sector companies in order to address the fiscal deficit situation, which stands at 6% of the GDP. It is estimated that the government could raise more than Rs 500 bn from the process. The ministry is likely to be headed by a minister of a cabinet rank and Montek Singh Ahluwalia is said to be the front runner for the post.

Although the exact details will emerge in due course, it is heartening to note that there remains a common thread of reforms even when the government moves to a rival political formation. To that extent, we must celebrate the Indian democracy, which is the best bet for unleashing the human potential in our country.

Bharti dials MTN again
Bharti Airtel has announced that it is in talks with the South African telecom major MTN for a merger involving a cash and share swap. As reported in a leading business daily, the deal size is pegged at US$ 23 bn. While Bharti will acquire a 49% economic interest in MTN. MTN, along with its shareholders, in turn will acquire a 36% economic interest in Bharti in the form of global depository receipts (GDRs). These GDRs will be listed in the Johannesburg stock exchange.

It may be noted that Bharti had held talks with MTN a year ago but failed. Reliance Communications had also tried. The deal is now made possible due to the new relaxations in foreign direct investment rules involving a swap of shares. However, the RBI has opposed the new rules and there will be more clarity in a couple of weeks. Moreover, opinion is divided on whether Bharti will have to go for an open offer or not. An open offer is triggered on the acquisition of a 15% stake but it is not clear what happens if two companies acquire stakes in each other. The deadline for the merger has been fixed as the end of July.

The merger will create the 3rd larger telecom player in the world after China Mobile and Vodafone. It will cater to more than 200 m customers in 24 countries and generate revenues to the tune of US$ 20 bn. While the merged entity will seek to benefit from the economies of scale over the long term, the immediate worry for investors is the extent of dilution in shareholders' value due to changes in Bharti's capital structure.

Equitymaster requests your view! Post a comment on "The disinvestment ministry is back". Click here!

2 Responses to "The disinvestment ministry is back"

kamal s

May 29, 2009

What ever steps will be taken for progress of india, is always welcomed by the the nation.



May 28, 2009

Late came but better came. The Govt will have full scope and freedome to do the tasks of building nation and expediting the reform processes. The employee in companies feel pride to to be share holders. Certainly now govt will collect money and can mobilise the amount in accelerating the developmental works taken.

The wornder ful thing is that there is no left. Left has been left. Their policy of neither playing nor letting to play is well known. Let us hope all the good from the new government

Equitymaster requests your view! Post a comment on "The disinvestment ministry is back". Click here!

More Views on News

6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

Dec 6, 2021

These penny stocks shed their penny status by surging 1,000% or more in the last one year.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

ONGC to NMDC: Here are 5 Stocks Value Investors Should Closely Track (Views On News)

Nov 26, 2021

Before investing in value stocks, research the company and gain insight into why the market is discounting it.

How to Prepare for a Stockmarket Pandemic in 2022 podcast (Views On News)

Dec 6, 2021

The transition from a small correction to a market crash to a bear market may be without any warning.

SEBI Issues Operating Norms For Silver ETFs. Here is All You Should Know (Outside View)

Dec 6, 2021

SEBI has issued operating norms for Silver ETFs to ensure uniformity of the schemes.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

Nov 30, 2021

These 5 companies dominate their sectors with a huge piece of the pie.

5 Indian Companies Embracing Blockchain Technology (Views On News)

Nov 23, 2021

Blockchain adoption in India was slow in the past. Now, the technology is being well received.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 6, 2021 03:30 PM