The Telecommunication Consultants India Limited (TCIL) has rejected the Department of Telecommunications (DoT)?s proposal to dilute its share holding in Bharti Hexacom through an initial public offering.
TCIL has told DoT that Bharti airtel, the majority partner in the joint venture, should dilute its stake if it planned to list the company. Airtel owns 70 per cent stake in Hexacom, while TCIL holds the remaining 30 per cent.
Moreover, TCIL has refused to increase the management fee paid by Hexacom to Bharti airtel for using airtel?s brand and technology resources. Prior to this, Bharti had suggested increasing the fee amounting to 5 per cent of Hexacom’s revenues.
In a note to DoT, TCIL had said, ?Despite our objections to imposing a management fee, Bharti airtel has now proposed to burden Hexacom with an increase in this fee.?
On the issue of diluting stake, TCIL said that if it agrees to issuing 25 per cent fresh equity in a public offering, its stake will reduce to 24 per cent.
Prior to this, Bharti airtel had suggested that TCIL exit the company by offloading its shares through an IPO. Thereafter, TCIL decided against exiting the company on grounds that it may get a higher valuation at a later stage.
While the two companies have failed to reach a consensus on these issues, airtel has agreed to pay a 20 per cent dividend to TCIL for the financial year 2010-11. From financial year 2013, TCIL has proposed a dividend of not less than two-thirds of Hexacom’s divisible profits.
TCIL has asked DoT to seek a legal opinion on all three issues, before taking a final decision.
