Indian incumbent Bharti Airtel has offered to list a stake in its Hexacom subsidiary to allow its state-owned minority JV partner, Telecom Consultants of India Ltd (TCIL), to exit the business. Bharti Hexacom operates mobile services in the North-East of…
Indian incumbent Bharti Airtel has offered to list a stake in its Hexacom subsidiary to allow its state-owned minority JV partner, Telecom Consultants of India Ltd (TCIL), to exit the business. Bharti Hexacom operates mobile services in the North-East of India.
TCIL has a 30% stake in Hexacom and has been looking to sell for a number of years, according to an Economic Times report. The article states that the sale process was put on hold by the cabinet secretary in April following claims that Deloitte allegedly undervalued the stake. The consultancy had set a base price of Rs18bn (US$395m), with Hexacom having a turnover of over Rs17bn (US$374m) and profits of over Rs4bn (US$88m) last year.
Bharti’s regulatory head, Narendra Gupta, who is also on the board of Hexacom, has suggested listing 25% of TCIL’s holdings on the stock exchange as a transparent and fair way to end the current impasse, according to the Economic Times.
Bharti and TCIL had disagreed on the ownership agreement of Hexacom which led to TCIL deciding to sell its stake in 2009.
TCIL had been seeking dividends from Hexacom since 2004, when it began to generate profits, but Bharti continually refused on the grounds that it was using all of Hexacom’s revenues to expand in the market and keep up with the competition.
TCIL had also sought the listing of Hexacom, but Bharti, who are listed itself, refused on the grounds that their policy does not allow them to list subsidiaries.
Bharti cited the shareholder agreement which it claims states that TCIL cannot insist on listing Hexacom or receiving any dividends.
Before the valuation controversy TCIL had received two bids in December 2010 for its stake, with one being from Bharti Airtel.
However, Bharti pulled out of the deal in March blaming government delays.
