New Delhi: The telecom ministry has asked state-owned Telecommunications Consultants India Limited (TCIL) to revisit the proposal to exit from its joint venture with Bharti Group in Rajasthan, as it has 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% stake in the JV and the remaining 30% is held by 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 members of Parliament and the financial results of the joint venture (JV), TCIL has been advised to revisit the issue of disinvestment of 30% 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 a pace with the intense competition in the market.
For the year 2009-10, Bharti Hexacom earned a turnover of Rs2,690.86 crore and a profit of Rs624.34 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 Rs106.20 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 this year at the rate of 20% or equivalent to the amount it would give to its shareholders.
For the year 2010-11, Bharti has recommended a dividend at the rate of 20%, or Rs1 per share.
Furthermore, TCIL anticipates that Bharti Hexacom may propose and declare an interim dividend of 20% of paid-up capital at its next meeting in lieu of non-declaration of a dividend for 2010-11, in addition to a 20% dividend to be declared for the year 2011-12 at the end of the year.