Comments
Telecommunication Consultants India Ltd (TCIL) has rejected a proposal to dilute its share holding in Bharti Hexacom through an Initial Public Offering. TCIL has told the Department of Telecom that Bharti Airtel, the majority partner in the joint venture, should dilute its stake if it wanted to list the company.
While Airtel owns 70 per cent stake in Hexacom, balance 30 per cent is held by TCIL. Hexacom offers mobile services in Rajasthan.
Management fee
TCIL has also refused to increase the management fee paid by Hexacom to Bharti Airtel for using Airtel brand and technical know-how. Bharti had proposed to increase the fee amounting to 5 per cent of Hexacom's revenues. “Despite our objections for imposition of management fee instead of addressing our legitimate grievances against the imposition of management fee by Bharti Airtel, it has now proposed to burden Hexacom with increase in the management fee also further cost in the name of development and know-how fee amounting 5 per cent of the gross of Bharti Hexacom,” TCIL said in a note to DoT.
On the issue of diluting stake, TCIL said that if it agrees to the proposal of issuing fresh equity of 25 per cent in a public offering then its stake will get reduced to 24 per cent. “Hence, TCIL will lose its ability to enforce its shareholders rights through a special resolution. Hence, TCIL considers that listing of shares should be by offering Bharti Airtel equity, as it holds 70 per cent shares so that TCIL may exit at appropriate time after the listing,” the state owned company said. Bharti Airtel had suggested that TCIL may exit the company by offloading its shares through an IPO. However, TCIL later decided against exiting the company on grounds that it may get higher valuation at a later stage. While the two companies are at variance over these issues, Bharti Airtel has agreed to pay a dividend of 20 per cent to TCIL for the financial year 2010-11. From FY13,TCIL has proposed a dividend of not less than two-thirds of Hexacom's divisible profits.
TCIL has requested DoT to take legal opinion all the three issues before taking a final decision.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.