The Telecom Ministry has asked state-owned Telecommunications Consultants India Ltd (TCIL) to revisit the proposal to exit from its joint venture with the Bharti Group in Rajasthan, as it had not received any dividend despite the JV making profits since 2009-10.
Bharti Hexacom, a joint venture between Bharti airtel and TCIL, offers mobile services in Rajasthan. Bharti owns a 70 per cent stake in the JV and the remaining 30 per cent is with TCIL.
The company also offers mobile services in six northeastern states (excluding Assam) and has a little over 15 million customers. “Looking at the gravity of issues raised in communications from various Member of Parliaments (MPs) and the financial results of the joint venture (JV), TCIL has been advised to revisit the issue of disinvestment of 30 per cent of its stake in Bharti Hexacom afresh. “And, after making a threadbare analysis of the issues raised, to furnish considered and conscious recommendations as to whether it would be appropriate for the government of India to go ahead with the sale of TCIL’s stake in Bharti Hexacom,” a DoT source said.
Citing the factors favouring the exit of TCIL from Bharti Hexacom, they said TCIL had sought payment of a dividend while adopting the annual accounts of the JV every year, but this was not agreed to by Bharti Group on the ground that Bharti Hexacom has been using all internally generated resources for expansion of networks to keep apace with the intense competition in the market.
For the year 2009-10, Bharti Hexacom earned a turnover of Rs 2,690.86 crore and a profit of Rs 624.34 crore. TCIL had also sought listing of Bharti Hexacom so that it could exit the JV at the prevalent buoyant prices of mobile service providers in India. This was also declined by Bharti Group on the ground that their flagship company, Bharti airtel, is already listed and as such, their policy does not permit their subsidiaries to be listed, the letter said. TCIL neither received any return on its investment of Rs 106.20 crore, nor did it have an effective say in the company.
However, Bharti airtel is understood to have agreed to give a dividend to its minority partner in the Rajasthan circle, state-run TCIL, this year at the rate of 20 per cent or equivalent to the amount it would give to its shareholders. For the year gone by, that is 2010-11, Bharti airtel has recommended a dividend at the rate of 20 per cent, or Re 1 per share. Furthermore, TCIL anticipates that Bharti Hexacom may propose and declare an interim dividend of 20 per cent of paid-up capital at its next meeting in lieu of non-declaration of a dividend for 2010-11, in addition to a 20 per cent dividend to be declared for the year 2011-12 at the end of the year.