According to the Ministry of Law, the Telecom Consultants of India Limited (TCIL), which owns 30 per cent stake in Bharti Airtel’s subsidiary, Hexacom, should not attempt to list the company, say news reports.
Further, the Ministry of Law has suggested that TCIL accept Bharti Airtel’s offer of a dividend at 20 per cent from financial year 2011-12 onwards.
Hexacom offers mobile services in the North Eastern states (excluding Assam) and Rajasthan. The company has about 18 million customers.
TCIL and Bharti Airtel have been at odds over Hexacom for quite some time now. In 2011, Bharti Airtel had withdrawn its bid to buy out the government’s 30 per cent stake in the company, citing delays in the sale process. The government had demanded a substantial premium over the Rs 18 billion base price fixed by Deloitte, as well as a six-month extension to conclude the sale process.
Bharti Airtel’s withdrawal left Punj Lloyd as the only bidder, which led to the government postponing the process. In 2005-06, TCIL had made another attempt to sell its stake in Hexacom, but decided against it on grounds that the Rs 2.62 billion offered by Bharti Airtel for the same was an inadequate amount.
The two companies are also at odds on Bharti Airtel’s attempt to impose a management, development and technical fee on Hexacom. TCIL had appointed an independent consultant to examine the issue, who said that Bharti Airtel was well within its right to impose such a fee.
However, the consultant added that it was not reasonable for Bharti Airtel to charge a development and technical know-how fee at 5 per cent of Hexacom’s gross revenues, since the company’s revenues constituted a part of the management fee already charged by Bharti Airtel.
