New Delhi, Sept. 26: Telecommunications Consultants India (TCIL), a “mini ratna” public sector company, is set to divest its 20 per cent stake in Hexacom India, the company that offers cellular mobile services in Rajasthan.
Communications minister Pramod Mahajan is likely to place the proposal before the Cabinet to seek approval after he returns from Mauritius next week. TCIL holds 30 per cent of the equity in the Rs 150-crore company.
The public sector telecom company and Shyam Cellular Infrastructure hold 30 per cent each in Hexacom, while PCM Mauritius Private Ltd (an associate of MTC Kuwait), Telesystem Mauritius Private Ltd (a subsidiary of Telesystem International Wireless Inc of Canada), Mobile Wireless Company Ltd Mauritius (a subsidiary of MTC Kuwait) and Shyam Telecom Ltd (India) hold 10 per cent each.
Recently, the Telecom Commission had given an in-principle approval for the selloff. It had also asked the TCIL board to formally approve it and refer the case to the disinvestment ministry to work out the modalities for selloff, including its valuation.
“The company will not lose any control over the functioning and will still remain on the board of Hexacom. TCIL needs money for its other projects that it plans to pursue, including its activities in Kenya and Nepal, and other joint ventures,” said a senior official in TCIL.
“We as a company feel that this is the most favourable time for its disinvestment in Hexacom as its financial position has improved sharply. It has a market share of 75 per cent. Any delay would lead to an erosion in its value due to competition,” the official added.
However, a few members in the Telecom Commission are likely to oppose the selloff proposal. “The valuation of Hexacom has not been undertaken yet; the figures that are being bandied about in the market have little credence. Moreover, TCIL has started earning profits and, therefore, its disinvestment at this stage may not be seen as a correct policy by many interested parties. It is a cash-rich company and, therefore, the argument is that it needs to take out money for its other projects has no logic,” said a senior official in the Telecom Commission.
The communications ministry is set to seek the support of disinvestment ministry. A senior official said: “Who will buy a sick company' If it is making profits, the value of its shares will be higher. It should go ahead with the sale.”
TCIL offers telecom consultancy and turnkey project execution services in India and to 44 countries in West Asia, Africa, south and south-east Asia. The company plunged into the mobile market in 1995, when the telecom sector was opened up. The aim was to acquire requisite pre-qualification expertise in order to bid for overseas contracts in the cellular business.
Initially, TCIL, Shyam Telecom Group, Mobile Telecommunications Company (Kuwait) and their associates formed a consortium with committed stakes of 30 per cent, 40 per cent and 30 per cent respectively. Hexacom bid for six circles and won the letters of intent (LoIs) for the north-east and Rajasthan.
The Cabinet clearance for its equity participation was given in 1996; it launched its cellular services next year in Jaipur.