The Department of Telecommunications (DoT) plans to ask Bharti airtel to give the Telecommunications Consultants India Limited (TCIL) 20 per cent dividend in Bharti Hexacom. TCIL currently holds 30 per cent stake in Bharti Hexacom.

Hexacom offers mobile services in six north-eastern states (excluding Assam) and Rajasthan and has a little over 15 million customers. The government owns 30 per cent in Bharti Hexacom through TCIL.

For the fiscal year 2010-11, airtel has paid 20 per cent dividend to its shareholders.

Prior to this, DoT had deferred its plans to sell the government’s 30 per cent stake in Bharti Hexacom.

Though the TCIL board had been looking to exit the company for some time, it reconsidered, keeping in mind Bharti Hexacom’s strong performance and potentially higher valuations after the launch of 3G services.

Also, Bharti airtel had considered listing its subsidiary to provide an exit option to its minority joint venture partner.

Bharti airtel also had the first right of refusal to this stake. Earlier, when TCIL had expressed its intent to exit Hexacom, the government had invited bids for its stake in 2010, after Deloitte had fixed a base price of Rs 18 billion.

Though five companies had submitted technical bids, only Bharti airtel and Punj Lloyd had submitted financial bids in December 2010. In March 2011, Bharti airtel withdrew its bid, on grounds that the government had delayed the stake sale process.

Thereafter, the sale process was put on hold in May 2011 after the cabinet secretary had requested that the base price be re-evaluated following complaints that it was too low, since Hexacom had a turnover of over Rs 17 billion and profits of over Rs 4 billion in 2010.