FinMin opposes sale of Bharti Hexacom stake

The Department of Economic Affairs (DEA) has raised apprehensions over the proposed sale of the 30 per cent stake held by state-owned Telecommunications Consultants India Ltd (TCIL) in Bharti Hexacom Ltd. Bharti Hexacom is a joint venture between Bharti Airtel (formerly known as Bharti Televenture Ltd) and TCIL.

Given the ongoing economic turmoil, the DEA has raised concerns that the government may not be able to get the right value for its stake. “While the proposal has inherent merit in the absence of any other technical mechanism available to TCIL for repatriation of profits of the JV, the present is not the most opportune time for disinvestment of equity by TCIL,” according to the DEA, which has advised the Department of Telecom (DoT) to seek only an approval “in principle” from the Cabinet Committee on Economic Affairs (CCEA) on the stake sale. The exact course, it added, would be determined later between the DoT and the DEA.

TCIL has been seeking an exit route for over two years. It first wanted to get the company listed so that it could exit. However, the proposal was turned down by Bharti Airtel, which has 70 per cent stake. TCIL wanted to focus on its core area of providing turnkey solutions rather than mobile services. The government was against the proposal. The company undertakes projects for rolling out telecom networks. It has also forayed into building roads.

“This is an internal matter of the government and there has been no official communication to us in this regard. Therefore, we cannot comment,” said a Bharti Enterprises spokesperson.

Bharti also turned down TCIL’s request for a dividend payout, since Hexacom was using all its internally generated revenues for expansion. The DoT, in its note to the CCEA, said, “TCIL has neither received any return on its investment of Rs 106.02 crore, nor has had an effective say in the company. In the light of the above, TCIL decided to disinvest its entire 30 per cent equity through the open bidding process.”

The Telecom Commission, the policy making arm of the DoT, had given its approval to the divestment on August 21, 2008.