The government has deferred a plan to sell entire 30% stake of telecom PSU TCIL in JV Bharti Hexacom which offers mobile services in Rajasthan, in view of its profit making performance for last several years.
The government owns 30 % holding of Hexacom through public sector company Telecom Consultants of India Ltd (TCIL) and India's largest telecom company Bharti Airtel owns the rest.
The cabinet secretary has asked the Telecom Ministry to re-evaluate the Rs 1,800-crore base price fixed by consultant Deloitte.
This is because the government had received complaints from several MPs including and independent agencies that the base price was too low, especially considering that Hexacom had a turnover of over Rs 1,700 crore and profits of over Rs 400 crore in 2010.
Hexacom offers mobile services in Rajasthan and six northeast states (excluding Assam) and has a little over 14 million customers. Bharti Airtel, has the first right of refusal to this stake.
Last month, Bharti Airtel withdrew its bid to buy out the government's 30 % stake, citing undue delay in the sale process. Bharti's exit came after the government had demanded a substantial premium over the Rs 1,800 crore base price fixed by its consultant Deloitte and had also sought an additional six-month extension to conclude the sale process.
"Looking at the gravity of the issues raised in the communications from the various MPs and the latest financial results of the JV, TCIL has been advised to re-visit the issue of divestment afresh and after making a threadbare analysis of the issues raised to furnish a consolidated and conscious recommendation as to whether it would be appropriate for the government of India to go ahead with the sale of TCIL's stake in Hexacom," says an internal note of DoT.
In 2009, the telecom department had decided that TCIL must exit from Bharti Hexacom on account of two factors.
According to sources, TCIL has been denied dividend payouts every year by the majority shareholder saying the revenues are being used for expansion of network to keep up with the intense competition in the market.
Second, TCIL had sought the listing of Bharti Hexacom, which too was turned down, on the grounds that the flagship company (Bharti Airtel) is already listed and as such their policy does not permit subsidiaries to be listed. Besides, as per the shareholders agreement, TCIL cannot insist on listing or getting dividend.