Bharti Airtel, TCIL divided over Hexacom dividend

NEW DELHI: The tussle between the two shareholders of mobile phone company Bharti Hexacom has intensified, dashing hopes of a quick resolution.

Bharti Airtel, the majority shareholder in the JV, has agreed to the minority partner's long-pending demand for a dividend from this fiscal onwards. For the year gone by (2010-11), Bharti Airtel has proposed a dividend at the rate of 20% amounting to 1 per share. But the minority partner has demanded that the dividend for this period be equivalent to 20% of the paid-up capital of the company.

Hexacom offers mobile services in six north-eastern states (excluding Assam) and Rajasthan, and has a little over 15 million customers. The government owns 30% in Bharti Hexacom through Telecom Consultants of India Ltd ( TCIL), while Bharti Airtel holds the rest.

"Appreciating the difficulties in declaration of dividend for 2010-11, TCIL considers that Bharti Hexacom may propose and declare interim dividend at 20% of the paid-up capital ... in lieu of non-declaration of dividend for 2010-11 in addition to the 20% dividend to be declared for 2011-12 at the year-end.

For the next financial year, TCIL proposes that subject to Bharti Hexacom's audited accounts confirming availability of divisible profits and approval of Hexacom's investment plan, not more than two-thirds of divisible profit for any year may be declared as dividend to shareholders subject to a minimum of 20% of the paid-up share capital," its CMD VK Sharma said in a September 5 communication to the telecom department.

TCIL has also complained to the government that despite its protests, Bharti Airtel continued to impose a management fee on Hexacom, according to documents reviewed by ET. The complaint adds that Bharti Airtel had now proposed to impose a 'development and knowhow fee' equivalent to 5% of the gross earnings of Hexacom from April 1, 2011. TCIL also said that in the event of a listing Bharti Airtel should offer its shares, while the state-run firm would exit later.