After going back and forth over the proposal for over two years, Telecommunications Consultant of India Ltd (TCIL) has now scrapped its plans to exit Bharti Hexacom Ltd (BHL).

TCIL owns 30 per cent stake in Bharti Hexacom, while the balance is with Bharti Airtel.

The decision to stay invested in Bharti Hexacom was taken by TCIL's board of directors and has been communicated to the Department of Telecom.

Bets on 3G

“TCIL has intimated that the Disinvestment Committee of Directors of TCIL considered various factors including the present performance of Bharti Hexacom, future prospects of valuation being attractive due to induction of 3G and other technologies; attractive return from the company on account of capital appreciation; and availability of limited buyers for TCIL's stake and recommended deferring the process of exit of Bharti Hexacom. Hence there is no proposal to sell 30 per cent equity holding of TCIL,” an internal DoT note stated.

The stake sale has been in the offing since 2009, when the Cabinet Committee on Economic Affairs had given its nod to TCIL to exit the venture.

TCIL had sought dividends pay out while adopting annual accounts every year, but this was not agreed to by the Bharti Group on the ground that BHL was using all its internal generations for expansion of network to keep pace with the intense competition in the market.

TCIL has neither received any return on its investment nor had effective say in the company.

TCIL had also explored the option of listing of BHL so that they could exit at the buoyant prices of mobile companies prevalent in India at that time. This was also declined by the Bharti Group on the ground that their flagship company Bharti Airtel Ltd is already listed and as such their policy does not permit subsidiaries being listed

Then the Government invited bids for the stake for which five companies had evinced interest, but only two put in their bids. But both these bidders — Bharti Airtel and Punj Lloyd — later withdrew their bids on grounds that the Government was taking too much time in deciding the pricing scheme.

Base price

While independent consultants appointed by TCIL had suggested a base price of Rs 1,800 crore for the 30 per cent stake, various Members of Parliament suggested that the Government should collect over Rs 10,000 crore from the buyer based on the Hutchison-Vodafone deal. Vodafone paid $19 billion for 23 million subscribers.

Suggestions were also made by some MPs that TCIL should not exit Hexacom at the moment since the mobile market was still growing.

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